To Level the Retirement Playing Field, Expand CIT Access to 403(b) Plans
By Andy Reed
July 21, 2025
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Bringing collective investment trusts to 403(b) participants could generate another $500 million annually in retirement wealth, a Vanguard research executive writes.
Teachers, nurses and other public and nonprofit workers face a double disadvantage when it comes to saving for retirement. They often earn lower incomes than their for-profit counterparts and pay higher fees on their investments through workplace retirement plans. This is because 403(b) investment menus typically lack a key ingredient that is available to their 401(k) counterparts: collective investment trusts.
Vanguard’s research team analyzed investment fees in retirement plans covering more than 50 million participants. The cost gap that emerged appeared modest at first glance: Investments in 403(b) plans charge 0.41% on average, compared with 0.33% for 401(k) plans—a difference of 0.08%, or $8 for every $1,000 invested per year. But compound costs have profound consequences: Over a 40-year career, a nonprofit worker paying 8 basis points more in fees would have $23,000 less in retirement wealth. The words of Vanguard’s founder, Jack Bogle, ring true: “In investing, you get what you don’t pay for.”
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