Congressman Panetta Introduces Public Service Retirement Fairness Act
WASHINGTON, DC – Today, Congressman Jimmy Panetta (D-CA-20) introduced the bipartisan Public Service Retirement Fairness Act. The legislation will level the playing field and ensure public sector and non-profit retirement-savings programs have the same access to low-cost investments as for-profit retirement plans do. The legislation is cosponsored by Congressmembers Ron Estes (R-KS-04), Brendan Boyle (D-PA-02), Darin LaHood (R-IL-18), Madeleine Dean (D-PA-04), and Andy Barr (R-KY-06).
Teachers and other employees at public education K-12 institutions, nonprofit hospitals, charitable organizations, and other nonprofit employees have access to 403(b) defined-contribution retirement-savings plans to save money for the future. 403(b) plans are similar to 401(k) plans offered in the private sector but they have a major drawback in that they cannot invest in Collective Investment Trusts (CITs). CITs are collectively managed investment vehicles that typically have lower costs and more flexibility than the types of annuity contracts and mutual funds that the 403(b) plans are limited to investing in. Due to compound interest, these higher fees add up over time, potentially costing teachers and other public-service oriented professionals thousands of dollars in retirement savings. There is no reason why 403(b) defined-contribution plans cannot invest in CITs. Congressman Panetta’s legislation fixes this inequity by allowing 403(b) plans to offer these kinds of investments.
"Teachers and other public-service-oriented employees deserve flexibility when it comes to investing in their retirement. Our public servants on the Central Coast are not only limited in those types of investments, but they also must contend with a very high cost of living. We need to make sure we are doing all that we can to help strengthen their financial security, including their retirement savings," said Congressman Panetta. "My bipartisan bill will level the playing field for these employees, and others who have committed their careers to public service, potentially increasing their retirement savings by thousands of dollars."
"As a former state treasurer and member of the Kansas Public Employees Retirement System (KPERS) board, I understand the importance of robust retirement-savings programs for our teachers and service-oriented professionals. The bipartisan Public Service Retirement Fairness Act provides the flexibility needed for investment growth and parity with private sector 401(k) plans. The bill allows the men and women who serve their fellow citizens greater investment opportunities and potential retirement-savings gains," said Congressman Estes.
"At a time when promises to hardworking teachers, firefighters, social workers, public defenders, public health nurses, and other public servants are being broken, this bipartisan bill will address a basic unfairness in public sector and non-profit retirement-savings programs," said Congressman Boyle. "There is no reason for our public servants to be limited in their investment options and lose the opportunity to save thousands of dollars. This overdue fix is a step toward recommitting ourselves to those who serve others."
"I want to ensure that Illinois teachers, nonprofit employees, and public servants have access to low-cost investment retirement-savings plans," said Congressman LaHood. "Our bipartisan bill will level the playing field public-service-oriented employees and provide greater financial security, as they work towards a well-earned retirement. I look forward to working with my colleagues to getting this overdue and commonsense fix across the finish line."
"Ensuring Pennsylvania's public servants, from firefighters to school teachers, have access to an affordable retirement savings plans is incredibly important." Congresswoman Dean said. "This bipartisan legislation will allow these hardworking public servants greater financial security and peace of mind as they work towards a deserved retirement – it’s great to see my colleagues on both sides of the aisle working to remedy this long overdue problem."
"This legislation would enable teachers and other public sector employees to access low-cost retirement investments they previously couldn’t access. Financial security and inclusion are important priorities for me in Congress. If these proposed changes become law, it would help some of our hardest-working public servants plan for their futures," said Congressman Barr.
"The California State Teachers’ Retirement System commends Congressman Panetta and his colleagues for introducing the Public Service Retirement Fairness Act, which would give California’s more than 964,000 public school educators the ability to save more in their defined contribution retirement plans. This bill would allow CalSTRS 403(b) plan to use collective investment trusts, giving public school employees access to the same lower cost investment vehicles available to other state and local government employees," said Sandy Blair, Director, CalSTRS Retirement Readiness.
"The National Association of Government Defined Contribution Administrators heartily endorses the bipartisan Public Service Retirement Fairness Act introduced by Congressman Panetta and his fellow cosponsors. Amending IRC Section 403(b) to permit inclusion of CITs enables 403(b) plan sponsors to provide a more robust array of investment options at lower costs, providing the potential for increased retirement asset growth for plan participants—which include the nation’s 10 million teachers—and strengthen their ability to better recruit and retain top talent," stated National Association of Government Defined Contribution Administrators (NAGDCA) Executive Director, Matt Petersen. "CITs are common investment choices in 401(a), 401(k), and 457(b) governmental defined contribution plans. Unfortunately, existing statutory provisions, prohibit the inclusion of these investment options in 403(b) plans. Lack of access to the same breadth of investment structures long available to other types of governmental DC plans is costing 403(b) plan participants potentially thousands of dollars in retirement savings due to higher investment expenses and reduced returns and impeding 403(b) plan sponsors’ ability to build powerful, talent-attracting plans."