Both houses of state legislature back small business retirement plan

A retirement plan for private-sector employees who don’t have one at work has been endorsed by majorities in both houses of the State Legislature, boosting chances that the plan will become law.

The State Assembly’s Democratic majority and the Senate’s Republican majority each included the state Secure Choice Savings Program in their budget bills adopted this week.

The legislation represents the houses’ negotiating positions in talks with Gov. Andrew M. Cuomo for the 2018-19 state budget, which is due by April 1. The talks begin in earnest next week.

The savings program was first proposed by Cuomo in January. It would be voluntary, serving employees of small businesses, independent contractors and freelancers.

The main point of contention is whether the program would be administered by an existing state agency, which Cuomo wants, or a new board, which the legislature wants.

“Every entity of state government — the governor, Senate and Assembly — has now said, ‘We need to do this,’ ” said Bill Ferris, legislative representative for AARP New York, which lobbies on behalf of people 50 and older and backs the retirement plan.

Under the proposal, private-sector employers could opt into the retirement program and all of their employees would be enrolled unless they individually opt out.

Workers would save via payroll deductions up to the annual limits set for Roth Individual Retirement Accounts: For 2018 they are $5,500 for workers under 50, and $6,500 for those 50 and older.

Employers would not be allowed to match employee contributions; their only cost would be the administrative cost of setting up payroll deductions.

Still, the plan is opposed by the National Federation of Independent Business, which represents more than 10,000 small employers statewide, including 2,000 on Long Island.

Cuomo and lawmakers are responding to the high number of private-sector workers without a retirement plan on the job: 4.3 million statewide, or 54 percent of all workers, according to a December report by the New School for Social Research in Manhattan.

New York is among 40 states debating how to respond to the increased number of employees without a 401(k), defined benefit pension or other retirement plan on the job.

Ferris said, “AARP is encouraged by the major movement on this issue in the last week but in Albany nothing is over until the final vote is cast.”

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.