HR2988-119

What This Bill Does

The Protecting Prudent Investment of Retirement Savings Act is a multi-part ERISA bill aimed at retirement-plan investment governance. The Increase Retirement Earnings Act division requires fiduciaries to base investment decisions solely on pecuniary factors, with a limited documented tiebreaker for otherwise indistinguishable options, and prevents non-pecuniary factors from serving as the basis for qualified default investment alternatives. The No Discrimination in My Benefits Act division requires fiduciaries to select, monitor, and retain plan fiduciaries, counsel, employees, and service providers without regard to race, color, religion, sex, or national origin. The Retirement Proxy Protection Act division requires fiduciaries managing shareholder rights, including proxy voting, to act solely in the economic interest of participants and beneficiaries and to document proxy-voting decisions and authority. The Providing Complete Information to Retirement Investors Act division requires notices and acknowledgments before brokerage-window transactions and requires a GAO return-comparison study.

Who Benefits and How

Traditional asset managers benefit because retirement fiduciaries are steered toward financial-return criteria rather than ESG or other non-pecuniary objectives. Fossil fuel companies benefit if retirement plans and proxy voters become less likely to screen investments or shareholder votes for climate or ESG goals. Companies facing ESG shareholder proposals benefit from restrictions on retirement-plan proxy voting for non-economic objectives. Fiduciary-selected investment funds benefit if brokerage-window disclosures make self-directed alternatives less convenient. Service providers previously excluded on non-merit grounds benefit from restrictions on race, color, religion, sex, or national-origin considerations in plan service-provider selection.

Who Bears the Burden and How

Retirement plan fiduciaries must document pecuniary-factor decisions, tiebreaker uses, proxy-voting authority, proxy decisions, brokerage-window notices, and service-provider selection criteria. ESG-focused investment funds and ESG advocacy organizations lose leverage in retirement-plan investment menus and proxy voting. Proxy advisory firms and investment managers delegated proxy authority face economic-interest documentation duties when advising or voting for ERISA plans. Plan administrators and recordkeepers must deliver brokerage-window warnings and projected-balance notices each time participants direct money into, out of, or within non-designated investment arrangements. Minority-owned financial service firms may lose diversity-focused selection preferences if those preferences are treated as barred service-provider factors.

Key Provisions

• Requires ERISA fiduciaries to base investment decisions solely on pecuniary factors and document limited non-pecuniary tiebreakers.
• Bars non-pecuniary factors from serving as the basis for qualified default investment alternatives.
• Requires plan service-provider selection, monitoring, and retention without regard to race, color, religion, sex, or national origin.
• Requires proxy voting and shareholder-right decisions to be made solely in the economic interest of plan participants and beneficiaries.
• Requires brokerage-window notices and participant acknowledgments before each transaction involving non-designated investment arrangements.
• Requires a GAO study comparing returns from brokerage-window arrangements available in defined contribution plans.