Public servants, from firefighters to school teachers, would have access to affordable retirement savings plans just like private-sector employees do under bipartisan legislation recently introduced by U.S. Rep. Darin LaHood (R-IL).
“I want to ensure that Illinois teachers, nonprofit employees, and public servants have access to low-cost investment retirement-savings plans,” Rep. LaHood said. “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.”
Rep. LaHood on April 21 cosponsored the Public Service Retirement Fairness Act, H.R. 2741, with bill sponsor U.S. Rep. Jimmy Panetta (D-CA) and fellow cosponsors including U.S. Rep. Andy Barr (R-KY). If enacted, the bill would modify rules relating to 403(b) defined-contribution retirement-savings plans, which are similar to 401(k) plans offered in the private sector, but which cannot invest in Collective Investment Trusts (CITs), according to a bill summary provided by Rep. LaHood’s office.
CITs, which are collectively managed investment vehicles, usually have lower fees and more flexibility compared to the annuity contracts and mutual funds that the 403(b) plans are limited to investing in and which cost public servants more due to compound interest fees, the summary says, noting that H.R. 2741 would permit 403(b) plans to invest in CITs.
The National Association of Government Defined Contribution Administrators and ICMA-RC endorsed the bill, which has been referred for consideration to both the U.S. House Financial Services Committee and the U.S. House Ways and Means Committee.