A bipartisan bill enabling 403(b) plan sponsors to offer collective investment trusts to participants has been reintroduced in the House.
Expanding access to collective investment trusts, or CITs, would be a positive because they are collectively managed investment vehicles that typically have lower costs and more flexibility than the types of annuity contracts and mutual funds in which 403(b) plans are limited to investing, noted Rep. Darin LaHood, R-Ill., one of the Public Service Retirement Fairness Act's co-sponsors, in a news release.
Currently, CITs are allowed for most defined contribution plans, such as 401(k), 457(b), 401(a) and church-sponsored 403(b). But the biggest providers of 403(b) plans — colleges and universities, public school systems and hospitals — cannot offer CITs.
"Central Coast teachers and nonprofit employees tirelessly serve our community but face a high cost of living that is further compounded by a lack of access to flexible retirement plans, hindering saving," said Rep. Jimmy Panetta, D-Calif., the bill's sponsor, in the news release. "My bipartisan Public Service Retirement Fairness Act will save these Americans up to thousands of dollars by ensuring they have the same access to lower cost, lower-fee retirement options as private sector employees."
The bill was first introduced in March 2020 and reintroduced April 21. Its other co-sponsors are Reps. Ron Estes, R-Kan.; Brendan Boyle, D-Pa.; Andy Barr, R-Ky.; and Madeleine Dean, D-Pa.
Matt Petersen, executive director of the National Association of Government Defined Contribution Administrators, endorsed the bill in a statement. "Lack of access to the same breadth of investment structures long available to other types of public sector DC plans is costing 403(b) plan participants — which include the nation's 10 million teachers — potentially thousands of dollars in retirement savings due to higher investment expenses and reduced returns," he said.