Pensions and Individual Retirement Accounts (IRAs): Investment Issues (CRS Report for Congress)
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| Release Date |
Revised Nov. 4, 2024 |
| Report Number |
R47996 |
| Report Type |
Report |
| Authors |
Katelin P. Isaacs, Coordinator; Elizabeth A. Myers; John J. Topoleski |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Employer-sponsored pensions and individual retirement accounts (IRAs) are important sources
of income security in retirement for many American households. Recent congressional interest in
retirement policy has focused on several aspects of pension investments. Some of this interest
involves pension investment policy spanning the state and local, federal, and private sectors. For
example, several hearings in the 118th Congress have examined the role of environmental, social,
and governance (ESG) investing in pension plans with regard to investment managers and
retirement policy generally. Some other recent developments in pension investment policy have
focused on a particular sector. For instance, recent regulatory and congressional responses to
private sector pension issues have addressed investment advice and investment fees. Similarly,
the investment practices of the Thrift Savings Plan (TSP), a retirement plan covering the civilian
federal workforce and the uniformed services, have been legislatively active over recent
Congresses, including the 118th Congress.
This report provides an overview of pension investment issues across state and local pensions,
federal pensions (with a focus on TSP), private sector pension plans, and IRAs. For each of these
types of pensions or retirement accounts, this report explains relevant federal authorities (if any), relevant federal oversight (if
any), and administrative issues. For example, while current TSP investment options are set out specifically under federal law
(5 U.S.C. §8438), state and local pension plans are generally governed by state laws, contract law, and/or state constitutions.
Moreover, state and local pension plans are exempt from many, but not all, requirements under the Employee Retirement
Income Security Act of 1974 (ERISA; P.L. 93-406), the federal law that covers most private sector pension plans.
Understanding the relevant authorities and administration of different types of pension plans and retirement accounts is
crucial to untangling policy proposals to address pension investment issues.
This report also identifies and synthesizes key pension investment issues for Congress, many of which have received
regulatory and congressional responses or have involved legislative activity in the 118th Congress. Specifically, lawmakers
have expressed interest in the following policy issues related to pension investments, by sector:
• State and local pensions: ESG investing, alternative investments, geopolitical considerations, and diverse
asset managers;
• Federal pensions, specifically with regard to TSP: the International “I” Fund benchmark and investments in
Chinese companies, ESG investment issues, the mutual fund window, diverse asset managers, and the
exercise of shareholder rights;
• Private sector pensions: investments based on non-pecuniary factors, exercise of shareholder rights,
alternative investments, collective investment trusts in 403(b) plans, investment advice, investment fees,
and qualified professional asset managers; and
• IRAs: investment restrictions and prohibited transactions.
For background on other aspects of these pension plans and retirement accounts, see CRS Report R47119, Pensions and
Individual Retirement Accounts (IRAs): An Overview.
