More than 10 million Americans in 403(b) retirement plans pay higher investment fees than workers in comparable 401(k) plans, a coalition of 30 industry executives told the Senate Banking Committee. To close that gap, the group is backing legislation that would open 403(b) plans to collective investment trusts (CITs) and non-registered insurance company separate accounts.
In a July 13 letter to Senate Banking Committee chairman Tim Scott and ranking member Elizabeth Warren, the group called on lawmakers to advance the Retirement Fairness for Charities and Educational Institutions Act (S.424/H.R.1310). The signatories include the chief executives of TIAA, Principal Financial Group, Prudential Financial, Pacific Life, Nationwide Financial, MetLife, Equitable, and Corebridge Financial. The list also includes Aon, Vanguard, T. Rowe Price, LPL Financial, State Street Investment Management, and Empower Retirement. Together, the signatories span asset managers, life insurers, and benefits industry groups.
The case for reform rests on a measurable fee difference. A Vanguard analysis found that CITs carry fees approximately 0.08 to 0.09 percentage points lower than comparable mutual funds for 403(b) plan participants. The same report found that a 0.08% fee difference costs the median $74,000-salary worker between $23,000 and $28,000 in forgone savings by age 65.
CITs are not required to register under federal securities laws. That removes marketing, distribution, and compliance costs that apply to retail investment products. A Morningstar study found that CITs are cheaper than equivalent mutual fund share classes 91% of the time.
CITs now account for 37% of assets in 401(k) plans, according to the coalition letter. CITs first surpassed mutual funds in target-date assets in 2024. They held 54% of that category by year-end 2025, according to Morningstar's 2026 Target-Date Fund Landscape report.
Congress recognized the inequity in SECURE 2.0 by amending the tax code, the coalition said, but did not make the corresponding changes to federal securities law. That left workers in the education, healthcare, and nonprofit sectors without the vehicle that has reshaped the 401(k) market.
The House passed its version of the fix as Section 202 of the INVEST Act (H.R.3383) by a 302-123 vote in December 2025. The Senate companion bill is included in the Empowering Main Street in America Act (S.5139). The Senate Banking Committee has not yet scheduled a vote.
For life insurers and retirement income providers, the legislation carries a separate provision. It would allow 403(b) plans to hold non-registered insurance company separate accounts. That would open a historically restricted channel for guaranteed lifetime income products.
US annuity sales reached $432.6 billion in 2024, a 12% increase from the prior year, according to LIMRA. That marked the first time quarterly sales exceeded $100 billion in all four quarters of a single year.
The coalition letter stated the legislation preserves investor protections. These investment options would be limited to employer-sponsored plans overseen by plan fiduciaries or employers taking on fiduciary responsibility. The bill does not alter the Securities and Exchange Commission's enforcement authority.
