After years in Congress and public life, I’ve often discussed retirement security with interested citizens. No matter your profession or political affiliation, the concerns are remarkably similar: people want to know that if they work hard, save responsibly, and plan ahead, they will be able to retire with dignity and peace of mind. They also believe that achieving this goal should not depend on whether someone worked in the corporate world or chose a career in service to others.
Yet today, millions of Americans who rely on 403(b) retirement plans – teachers, church employees, nonprofit workers, and others in service-oriented professions – are operating at a disadvantage through no fault of their own. Not because they failed to save. Not because they made poor financial decisions. But because outdated regulations in Washington continue to deny them access to the same lower-cost investment tools widely available to private-sector workers. At a time when Americans are already struggling to prepare for retirement amid inflation and economic uncertainty, that imbalance makes little sense.
Most Americans are familiar with 401(k) plans, the retirement savings vehicles commonly offered by private-sector employers. Workers in schools, churches, charities, hospitals, and many nonprofit organizations, however, often participate in 403(b) plans instead. These plans serve the same basic purpose: helping Americans save and invest for retirement over the course of their careers. But while the two systems are similar in principle, a major disparity has been allowed to develop between them.
Workers in most 401(k) plans can access collective investment trusts, or CITs, which have rapidly become a cornerstone of modern retirement investing. CITs are professionally managed investment vehicles that often provide the same diversification and long-term investment strategies as mutual funds, but at substantially lower cost that matters enormously over time.
CITs are increasingly used in target-date retirement funds that automatically adjust investment allocations as workers approach retirement age. While mutual funds can offer similar strategies, their management fees are often significantly higher. Even modest fee differences compound over decades, quietly draining retirement savings year after year.
For Americans who dedicate their careers to teaching children, serving congregations, supporting charities, or strengthening local communities, those losses can add up to tens of thousands of dollars over a lifetime. One analysis found that just a 0.08 percent annual fee reduction from access to CITs could translate into roughly $28,000 in additional retirement savings by age 65 for a typical 403(b) participant. That amounts to nearly six months of the average retiree’s expenses.
Congress recognized this problem when it passed the SECURE 2.0 Act in 2022. That legislation clarified under federal tax law that 403(b) plans may include CITs. It was an important bipartisan step toward modernizing retirement policy and expanding investment opportunities for nonprofit and faith-based workers. But the job was never fully finished because securities regulations were never updated to match the tax code changes, and many 403(b) plans still cannot realistically access CITs today.
This is not a debate about creating risky new products or weakening protections for investors. CITs are already widely used across the retirement system and are jointly overseen by federal and state banking regulators as well as the Department of Labor under ERISA standards. They have become mainstream tools for retirement investing because they help reduce costs while preserving strong fiduciary oversight.
Nor is this a partisan issue. Americans instinctively understand the unfairness of telling a teacher, pastor, or nonprofit employee that they deserve fewer retirement opportunities simply because they chose service over salary. Recent polling found that Americans overwhelmingly believe retirement plans should provide equal access to investment options regardless of employer type. Public policy should reflect that same common-sense point of view.
That is why the Securities and Exchange Commission now has an opportunity to finish the work Congress started. Under the leadership of Chairman Paul Atkins, the SEC has emphasized reducing unnecessary regulatory burdens, promoting competition, and advancing investor interests through practical, market-oriented reforms. Allowing 403(b) plans meaningful access to CITs would fit squarely within that vision.
This is a commonsense reform that would help millions of Americans build stronger retirements without creating new taxpayer obligations or expanding government programs. It would simply ensure that workers in the nonprofit and faith-based sectors are treated equally under the retirement system.
The bottom line is simple: Americans who spend their careers serving their communities should not be forced to accept weaker retirement options because Washington failed to modernize outdated rules. Congress already took an important first step. Now regulators must complete the job.
