Retirement Fairness for Educators and Nonprofit Employees
Millions of nurses, educators, and nonprofit employees save for retirement using an employer-sponsored 403(b) plan, which is their version of the well-known 401(k). While 401(k) participants can invest in collective investment trusts (CITs)—cost-efficient pooled investment products that offer similar investment strategies as mutual funds—403(b) participants are unable to do so.
Key Takeaways
- ICI supports policies and proposals, such as the Retirement Fairness for Charities and Educational Institutions Act, that level the retirement playing field for all Americans.
- Expanding access to lower cost CITs in retirement plans would not only provide increased investment choice and flexibility, it would also give 403(b) plan participants the opportunity to generate greater retirement wealth.
- The bipartisan Retirement Fairness for Charities and Educational Institutions Act would eliminate inequality in retirement plans and provide parity for 403(b) plan participants.
The Retirement Fairness for Charities and Educational Institutions Act, introduced in both chambers of Congress, is bipartisan legislation that would give Americans working in education, health care, and other tax-exempt organizations access to the same investment products in their employer-sponsored retirement accounts as everyone else.
CITs offer many advantages as retirement plan offerings. Increasingly popular, they:
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Have been used for decades as an investment option in 401(k) plans and the Thrift Savings Plan, the retirement plan for Congress and federal government employees.
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Are now the most prevalent investment vehicle in defined contribution plans, surpassing mutual funds;
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Benefit from strong regulatory oversight provided by the Office of the Comptroller of the Currency or other federal or state banking regulators, the Internal Revenue Service, and the Department of Labor.
The Retirement Fairness for Charities and Educational Institutions Act would also provide critical investor protections, helping ensure there is a fiduciary responsible for the selection and oversight of any CIT made available in a 403(b) plan.
