U.S. Representative Jimmy Panetta, D-California, has introduced the bipartisan Public Service Retirement Fairness Act, designed to ensure public sector and nonprofit retirement plans have the same access to low-cost investments as for-profit retirement plans do.

The bill would make collective investment trusts (CITs) an available investment vehicle for 403(b) plans. CITs are collectively managed investment vehicles that typically have lower costs and more flexibility than annuity contracts and mutual funds—the only types of investments allowed in 403(b) plans.

With excessive fee lawsuits extending to the 403(b) space, and account assets growing larger with time, 403(b) plan sponsors are inquiring about offering CITs on their plan menu.

“CITs are common investment choices in 401(a), 401(k) and 457(b) governmental defined contribution [DC] 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,” stated National Association of Government Defined Contribution Administrators (NAGDCA) Executive Director Matt Petersen in the association’s endorsement of the bill.

In a statement, Vanguard said, “With roughly $500 billion of 403(b) assets locked out of CITs, Vanguard estimates that the cost savings to 403(b) participants in plans that offer CITs could amount to as much as $250 million per year. Over time, this could translate into billions of dollars going back to retirement savers.”