New York Enacts Mandatory Retirement Savings Program Participation for Employers
On October 21, 2021, Governor Hochul signed legislation requiring all private sector employers who meet certain threshold criteria to participate in New York State’s Secure Choice Savings Program (SCSP). The legislation applies to all for-profit and non-profit employers who employed 10 or more employees in 2020, have been in business for at least two years, and do not already offer a qualified retirement plan to their employees. To read Governor Hochul’s announcement concerning this important new program, please click here.
Once enrollment in the SCSP opens, which is expected to occur in 2022, employers who satisfy the criteria for participation will be required to notify their employees of the program and automatically enroll them in it. Employees who do not wish to participate will have the right to opt out.
The SCSP is a self-sufficient retirement savings program in the form of an automatic-enrollment payroll deduction IRA. It is administered by a nine-member board appointed by the Governor. Notably, the program does not require matching funds from employers. It also exempts employers from liability for investment decisions made by the board and participating employees.
The board is required to publish informational materials for employers to distribute to their employees. These materials are not yet available, and the program has not yet opened for enrollment. Consequently employers are not required to take any action at this time, but will be required to establish a payroll deposit retirement savings arrangement for participating employees no later than nine months after enrollment opens.
Because the federal law known as ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan,” the SCSP may soon be the subject of federal court litigation commenced on behalf of employers claiming ERISA preemption.
Attorneys in our Labor and Employment Law Practice Group will continue to monitor developments concerning New York’s Secure Choice Savings Program, and welcome the opportunity to assist employers in need of guidance and advice in navigating the requirements of this new legislation.