What is New York City’s Mandatory Retirement Savings Program?

New York City’s Retirement Security for All Act, establishes a retirement savings program for all private employees in the city. The law became effective in May 2021.

Under the plan, all employers with five or more employees must automatically enroll eligible employees in an individual retirement account (IRA) or a defined benefit pension plan. Employers deposit funds into the program for every eligible employee. Employers must distribute information about the program to employees.

The program includes all employees 21 years of age and older who work at least 20 hours per week.

The retirement program is funded through deductions from employee wages. Employers are not required to contribute to the plan. The default deduction for employees is 5 percent of employee earnings up to $6000 for employees under 50 years of age. Employees 50 and over have a default deduction maximum of $7000.

Employees may opt out of the program or adjust their deduction as long as they stay within the cap. The program is entirely optional for employees. As an employee, you are free to not participate, adjust your contribution rates up or down, or do nothing at all.

Retirement saving plans created under the plan are portable. This means an employee can continue to contribute to the plan if and when they leave their job. This includes rolling their account over to a new job.

The Act also includes the creation of a Retirement Savings Board. This board is responsible for contracts with financial institutions and designing the processes for enrollment. The board includes three members appointed by the city’s mayor.

Are There Penalties for Not Participating in the Program?

Under the law, employers can face penalties for failing to participate in the program.

If you believe your employer is obligated to participate in the program but are not, you must contact the Enforcement Agency within a year of learning about the violation.

Employers who habitually fail to enroll employees in a timely manner are subject to increased fines. Fines will apply to each covered employee and begin at $250 for the initial violation.

Employers that violate the initial violation within two years are subject to a $500 fine. Subsequent violations within the two-year window face a $1000 fine.

Additionally, employers must keep records documenting their initiation of the program. Failing to do so can result in a $100 fine per violation.

Former New York City Mayor Bill DeBlasio enacted this law due to concerns about NYC employee retirement security. According to the city, “fewer than half of all working New Yorkers have access to a plan that can help them save for their retirement years and 40% of New Yorkers between the ages of 50-64 have less than
$10,000 saved for retirement.”

The city also notes that the majority of the people without sufficient retirement savings are mostly lower-income and disproportionately female and people of color.

Are You Concerned Your Employer is Violating the New York City’s Retirement Security for All?

This is a new program, but it’s still important for employers to provide access for employees. If you believe your employer isn’t doing their part, you can speak to someone who understands the law.

For more information or to schedule an appointment to discuss this or any employment law concern, contact Borrelli & Associates, P.L.L.C. to schedule a free consultation.