SIFMA Urges Senate to Vote for CITs in 403(b) Plans

A coalition led by the Securities Industry and Financial Markets Association is pressing the Senate Committee on Banking to quickly assemble and advance a bipartisan package of bills for capital formation, arguing that several long-stalled measures affecting retirement savers and investors have already demonstrated broad bipartisan support and are ready for enactment.

In a letter sent Monday to Senate Banking Committee Chair Tim Scott, R-South Carolina, and Ranking Member Elizabeth Warren, D-Massachusetts, SIFMA and seven other financial industry organizations urged lawmakers to build on momentum created by the House’s passage last year of the Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act, a sweeping capital markets bill, by advancing a Senate package that includes reforms affecting retirement plans, investor disclosures and securities offerings.

The appeal reflects the financial industry’s effort to capitalize on rare bipartisan consensus on a handful of targeted securities measures, particularly legislation that would expand investment choices for millions of nonprofit and public education employees participating in 403(b) retirement plans. Last week, a Christian group approved a resolution calling on Congress, the Securities and Exchange Commission, and the White House to remove remaining barriers preventing 403(b) retirement plans from offering collective investment trusts.

Multiple groups are also encouraging the passage of another bill that would make electronic delivery the default method for SEC-required investor disclosures.

The coalition—which includes the Investment Company Institute, Investment Adviser Association, Managed Funds Association, Financial Services Institute, American Securities Association, SIFMA’s Asset Management Group and the U.S. Chamber of Commerce—argued that modernizing securities laws would expand access to capital, reduce regulatory burdens and improve market efficiency while maintaining investor protections.

Among the retirement-related priorities, the groups highlighted the Retirement Fairness for Charities and Educational Institutions Act of 2025, which would amend federal securities laws to finally allow collective investment trusts to be broadly used as investment structures in 403(b) retirement plans. Although Congress addressed part of the issue in the SECURE 2.0 Act of 2022 by amending the tax code, securities laws remained an obstacle, preventing many 403(b) plans from accessing the lower-cost investment vehicles already widely used in 401(k) plans.

Supporters say the change would give teachers, hospital employees and nonprofit workers similar opportunities to those offered to private sector employers. CITs are governed by banking regulators, rather than by the SEC, and generally carry lower fees than comparable mutual funds. A Vanguard study cited by retirement industry advocates found average CIT fees of roughly 7 basis points, compared with 16 basis points for mutual funds, a cost difference that can compound into larger retirement balances over time for investors paying the lower fees. Morningstar data also show that CITs have overtaken mutual funds as the dominant investment vehicle in target-date funds.

Electronic Delivery for Investor Disclosures

The coalition also urged lawmakers to pass the Improving Disclosure for Investors Act, which would require the SEC to establish rules making electronic delivery the default method for investor disclosures, while preserving investors’ right to opt for paper communications. The bill would require multiple notices informing investors of their ability to opt out before electronic delivery becomes the default.

Industry groups argue that the proposal reflects how investors already consume financial information. SIFMA has pointed to survey research showing that a large majority of retail investors, across all age groups, prefer electronic delivery, with paper available upon request. The legislation has drawn support from such firms as Charles Schwab, Fidelity Investments and LPL Financial, as well as environmental organizations that argue reducing paper disclosures would lower costs and waste.

The letter emphasized that both measures enjoy bipartisan backing. According to the coalition, the Senate version of the electronic disclosure bill has 10 cosponsors, while the 403(b) legislation has attracted 19 cosponsors, split nearly evenly between Democrats and Republicans.

Other Capital Market Bills

Beyond retirement-focused legislation, SIFMA also called for passage of several capital markets bills, designed primarily to benefit institutional investors and public companies. Those include bills:

• expanding investment flexibility for closed-end funds;
• updating rules governing business development companies;
• broadening eligibility for well-known seasoned issuer status;
• allowing more companies to confidentially test investor interest before public offerings; and
• establishing a permanent SEC Senior Investor Task Force.

Many of those measures were included in the House-passed INVEST Act, which bundled more than 20 bipartisan bills—all intended to encourage public offerings, improve capital formation and modernize securities regulation. While much of that legislation targets issuers and institutional markets, retirement industry advocates viewed the inclusion of the 403(b) provision as one of the package’s most consequential reforms because it would give nonprofit workers access to investment structures already common in private sector defined contribution plans.

Despite the popularity of the 403(b) provision, Democrats in the Senate, including Warren, have criticized INVEST Act provisions that deregulate private markets, which leaves the bill in limbo.