Senate pushes bipartisan bill to let teachers and nonprofits access low-cost retirement funds
The Senate Banking Committee is considering legislation that would permit 403(b) retirement plans, used by teachers and nonprofit workers, to offer cheaper collective investment trusts.
During a hearing on business financing, the Senate Banking Committee examined a bipartisan bill that would let 403(b) retirement plans—common among public-school teachers, hospital staff, and other nonprofit employees—offer collective investment trusts, which typically have lower fees than traditional mutual funds. A recent Vanguard study highlighted a fee disparity of about 0.08 to 0.09 percentage points, potentially costing a median-salary worker tens of thousands of dollars over a career.
The proposed Retirement Fairness for Charities and Educational Institutions Act, sponsored by Sen. Katie Britt and co-sponsored by Sen. Raphael Warnock and 17 others, seeks to amend the Investment Company Act of 1940 and the Securities Act of 1933 to remove legal barriers. Industry leaders including Kenneth Bentsen of the Securities Industry and Financial Markets Association and Mike Flood of the U.S. Chamber of Commerce support the change, emphasizing that it would broaden fund choices without forcing plan sponsors to adopt them.
The measure follows the SECURE 2.0 Act of 2022, which removed a tax obstacle but left securities-law hurdles intact. Committee Chairman Tim Scott affirmed the proposal’s bipartisan backing, with 13 committee members signing on.
Why it matters
Lower-cost retirement options could save millions of nonprofit workers thousands of dollars over their careers.
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