A5450

An Act concerning employer obligations related to Defined Contribution Retirement Program enrollment and supplementing P.L.2007, c.92 (C.43:15C-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. Notwithstanding any other law, rule, or regulation to the contrary, when an employer fails to enroll an employee, who is required to be a participant, in the Defined Contribution Retirement Program as required pursuant to the provisions of P.L.2007, c.92 (C.43:15C-1 et seq.), the employer shall be subject to the special liability to the retirement program specified in this section.

b. If more than three months have elapsed from the time that contributions would have been required to be made to the retirement program pursuant to section 3 of P.L.2007, c.92 (C.43:15C-3), or between the date an employer starts reducing the compensation of an employee to pay the employee’s contribution to the retirement program and the date that the employee was required to become a participant of the retirement program as a condition of employment with that employer, then the employer shall incur a special liability as provided in this subsection. Under the special liability, the employer shall be required to pay 1/2 of the employee's cost, established by the computation provided in subsection a. of section 3 of P.L.2007, c.92 (C.43:15C-3), and shall include such amounts in the next budget subsequent to the certification of the special liability by the retirement program. The amount certified by the program shall be payable by the employer and shall be due and owing to the participant’s account even if the employee is no longer in the employ of the employer by the date such moneys are to be paid.

c. The employee’s obligation in the case of the employer’s failure to enroll the employee in a timely manner pursuant to the provisions of this section may be satisfied by regular installments, equal to at least 1/2 the normal contribution to the retirement program, over a maximum period of 10 years, but not more than 2 years in the case of any employee who has attained or will attain age 60 within 2 years. The Division of Pensions and Benefits shall provide notice to the employee by all reasonable methods, which shall include, but need not be limited to, notice by regular mail at the last known address of the employee, advising of the employee’s obligations and consequences for failing to remit payment in a timely manner.

2. This act shall take effect immediately.

STATEMENT

This bill establishes a penalty for employers that fail to enroll eligible employees in the Defined Contribution Retirement Program (DCRP).

Under the bill, if more than three months have elapsed between the date an employer starts reducing the compensation of a participant to pay the employee contribution to the program as required by law, and the date that the employee was required to become a participant of the program as a condition of employment with that employer, then the employer will be liable for half of the employee’s unpaid cost in addition to the full employer contribution cost owed by law to be paid in the next budget cycle. Any amount owed by the employer will be paid regardless of whether the employee is still employed by the employer.

The bill provides that the employee subject to an enrollment delay may satisfy any outstanding obligation of the employee through installment payments made over a maximum of 10 years, but not more than two years for an employee who has attained or will attain age 60 within two years. The bill also requires the Division of Pensions and Benefits to provide notice to the employee by all reasonable methods advising of the employee’s obligations and the consequences for failing to remit payment in a timely manner.