Congressman Panetta Reintroduces Public Service Retirement Fairness Act
Today, Congressman Jimmy Panetta (D-Carmel Valley) 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 private sector retirement plans do. The legislation is cosponsored by Representatives 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).
Faculty and staff at K-12 public education institutions, nonprofit hospitals, charitable organizations, and other nonprofits 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 cannot invest in Collective Investment Trusts (CITs).
CITs are collectively managed investment vehicles that typically have lower fees 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, higher fees add up over time, costing teachers and other public service professionals thousands of dollars in retirement savings. There is no reason why 403(b) defined-contribution plans should not be permitted to invest in CITs. Congressman Panetta’s legislation fixes this inequity by allowing 403(b) plans to offer these kinds of investments.
“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 Congressman Panetta. “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. I am glad to introduce this legislation today to provide a path to a strong, secure retirement for these public servants.”
"I want to ensure that Illinois teachers, nonprofit employees, and public servants have access to low-cost investment retirement-savings plans," said Congressman LaHood. "Public servants should not be limited in their investment options, and 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.”
"COVID-19 has taught us even more that we must honor the service of Pennsylvania's public servants, from firefighters to school teachers – and giving them access to affordable retirement savings plans is incredibly vital," 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. Financial inclusion and security are important priorities for me in Congress,” said Congressman Andy Barr (KY-06). “This bill will help hard-working public servants plan for their futures.”
"The California State Teachers’ Retirement System commends Congressman Panetta and his colleagues for reintroducing the Public Service Retirement Fairness Act, which would give all of California’s public school educators and school employees the ability to save more in their defined contribution retirement plans. This bill would allow CalSTRS 403(b) plan to use collective investment trusts that currently restricted from 403(b) defined contribution plans, giving public school employees access to the same lower cost investment vehicles that are available to other state and local government employees," said Sandy Blair, Director, CalSTRS Retirement Readiness.
“The National Association of Government Defined Contribution Administrators (“NAGDCA”) is pleased to endorse the Public Service Retirement Fairness Act. This legislation would allow governmental 403(b) plans to invest in the same investment vehicles that private sector 401(k) plans are allowed to invest in. Governmental plans serve the workers who are the backbone of our society: teachers, firefighters, police, and other public servants. This bill would correct the inequitable treatment of governmental employees and allow these public servants to access the innovative solutions and potentially lower costs that CITs offer to their private sector counterparts,” said Josh Luskin, NAGDCA President.
“The Public Service Retirement Fairness Act would significantly benefit millions of Americans who work hard every day to prepare for their retirement,” said Angela Montez, Senior Vice President, General Counsel & Chief Legal Officer ICMA-RC. “ICMA-RC strongly supports your provision that would permit 403(b) plan participants to access lower-cost collective investment funds. We have long utilized collective investment trusts and have found them to be effective in reducing the costs for the public sector retirement savers we support.”
“Vanguard applauds Congressman Panetta’s and his colleagues’ efforts to modernize retirement savings rules and expand Americans’ access to affordable investment solutions through the Public Service Retirement Fairness Act,” said John James, managing director and head of Vanguard Institutional Investor Group. “By enabling 403(b) plans to offer low-cost collective investment trusts to their participants, millions of educators, healthcare workers and other public servants will gain access to more affordable investment options to help them save for a secure retirement. Vanguard estimates that this change may result in cost savings of as much as $250 million per year and return billions of dollars back to 403(b) participants over the long-term.”