We talked to Jason Levy, Senior Counsel at Great Gray, about the counsel letters sent to legislators to help clarify Great Gray's position about the importance of including CITs in 403(b) plans.

Q: Why did Great Gray Trust Company send a letter to Congress?

A: Retirement plans covering more than 14 million employees in non-profit sectors, like public-school teachers, medical professionals, and employees of charities and religious organizations, are being denied access to strictly-regulated and transparent investment products that can deliver improved retirement security. That's wrong. As policymakers look to make things right for those people, it is important to set the record straight about the strict regulations imposed on CITs and the protections they afford to retirement investors.

Q: Why should 403(b) plans have access to CITs?

A: Because CITs often have lower fees and offer strict retirement investor protections, fiduciaries for private sector 401(k) plans are increasingly selecting CITs as investment options over mutual funds and other pooled investment products. Fiduciaries to 403(b) plans should have the same access to this investment product as 401(k) plans. It's a fair and reasonable ask of our legislators to create parity of choice for retirement investors, regardless of who their employer is.

Q: What is Great Gray's response that CITs in 403(b)s would not be beneficial - as investor advocacy groups say - because some plans are not governed by ERISA?

A: This is a really important point, and it's one that opponents of the legislation got wrong. CITs frequently offer significant cost savings, are strictly regulated, and afford additional protections to retirement savers, including participants in 403(b) plans, that are not covered by ERISA.
Unlike mutual funds, CITs are subject to ERISA, and, as a result, investment managers of CITs must comply with ERISA fiduciary obligations that have been described by federal courts of appeal as "the highest known to the law." Non-ERISA 403(b) plans would benefit from these protections because the CITs investment managers must follow these ERISA requirements whenever a CIT has at least one participating ERISA covered plan without regard to ERISA-covered status of the other participating plans.

Q: Why is there a sense of urgency to pass this legislation?

A; The sense of urgency is not about which administration is in office. This is a bipartisan issue that affects millions of people. The urgency is centered on fairness and establishing a level playing field for teachers and other nonprofit employees whose retirement plans are being denied access to the same investment vehicles as private sector retirement plans.

Related: Should collective investment trusts be allowed in 403(b)s? The saga continues

The longer the process takes, the more one group of people is denied fairness in retirement options access. Further delays in adopting this legislation means that 403(b) plan investors lose the opportunity for lower-cost investments that, over time, can substantially improve their retirement outcomes.

Instant Insights /

Collective investment trusts in 403(b)s? CIT provider urges Congress to pass new bill

More From HR Executive

Related Stories

Recommended For You