A committee within the House of Representatives voted late Wednesday evening to pass a bipartisan bill that would permit 403(b) retirement plans to invest in collective investment trusts (CITs).
In a 35 to 12 vote, the House Financial Services Committee voted to advance an amended version of the Retirement Fairness for Charities and Educational Institutions Act of 2023, granting access to CIT funds for nonprofit employees and public workers participating in 403(b) retirement plans.
Sponsored by Rep. Frank Lucas, the legislation would settle changes to federal securities laws under SECURE 2.0, which while allowed 403(b) retirement plans to invest in CITs, did not amend securities laws by the time the final bill was passed in December 2022.
After the vote, multiple organizations and financial houses came out to share their perspective of the legislation, all applauding the Committee for voting to pass. The Insured Retirement Institute (IRI) noted how the legislation represents public workers and their need for efficient retirement savings.
“This bipartisan bill will put millions of teachers, hospital workers, clergy, and non-profit employees participating in 403(b) retirement plans on a level playing field with all other retirement savers,” said Paul Richman, chief government and political affairs officer at the IRI.
In its statement, Vanguard added how the bill is a step forward to repairing long-standing disparities between 401(k) and 403(b) retirement plans, as the former offers more flexibility for investment funds.
“Educators, and other employees of non-profits and schools, should have access to the same low-cost investment vehicles, such as collective investment trusts, as their counterparts in other retirement plans,” said John James, head of Vanguard Institutional Investor Group. “Vanguard commends the bipartisan efforts to create parity across the retirement savings system, which will ultimately improve Americans’ ability to save towards a secure retirement.”
The Investment Company Institute (ICI) also chimed in, applauding the Committee for advancing the legislation, along with a different bill that would make private investments through closed-ended funds accessible to retail investors. “The bills advanced today will strengthen our capital markets and investors’ access to retirement investment opportunities,” said Investment Company Institute (ICI) President and CEO Eric Pan. “ICI strongly encourages swift consideration of these bills by the full House of Representatives.”
The bill will now move to the House of Representatives to be voted on.
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