H.R. 5339 (RFS) - Protecting Americans’ Investments from Woke Policies Act

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5339 Referred in Senate (RFS)]

<DOC>
118th CONGRESS
2d Session
H. R. 5339

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

September 19, 2024

Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs

_______________________________________________________________________

AN ACT

To amend the Employee Retirement Income Security Act of 1974 to specify
requirements concerning the consideration of pecuniary and non-
pecuniary factors, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Protecting
Americans' Investments from Woke Policies Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:

Sec. 1. Short title; table of contents.
DIVISION A--ROLL BACK ESG TO INCREASE RETIREMENT EARNINGS

Sec. 1001. Short title.
Sec. 1002. Limitation on consideration of non-pecuniary factors by
fiduciaries.
DIVISION B--NO DISCRIMINATION IN MY BENEFITS

Sec. 2001. Short title.
Sec. 2002. Service provider selection.
DIVISION C--RETIREMENT PROXY PROTECTION

Sec. 3001. Short title.
Sec. 3002. Exercise of shareholder rights.
DIVISION D--PROVIDING COMPLETE INFORMATION TO RETIREMENT INVESTORS

Sec. 4001. Short title.
Sec. 4002. Brokerage window disclosures.

DIVISION A--ROLL BACK ESG TO INCREASE RETIREMENT EARNINGS

SEC. 1001. SHORT TITLE.

This division may be cited as the ``Roll back ESG To Increase
Retirement Earnings Act'' or the ``RETIRE Act''.

SEC. 1002. LIMITATION ON CONSIDERATION OF NON-PECUNIARY FACTORS BY
FIDUCIARIES.

(a) In General.--Section 404(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(a)) is amended by adding at the
end the following:
``(3) Interest based on pecuniary factors.--
``(A) In general.--For purposes of paragraph (1), a
fiduciary shall be considered to act solely in the
interest of the participants and beneficiaries of the
plan with respect to an investment or investment course
of action only if the fiduciary's action with respect
to such investment or investment course of action is
based only on pecuniary factors (except as provided in
subparagraph (B)). The fiduciary may not subordinate
the interests of the participants and beneficiaries in
their retirement income or financial benefits under the
plan to other objectives and may not sacrifice
investment return or take on additional investment risk
to promote non-pecuniary benefits or goals. The weight
given to any pecuniary factor by a fiduciary shall
reflect a prudent assessment of the impact of such
factor on risk and return.
``(B) Use of non-pecuniary factors for investment
alternatives.--Notwithstanding paragraph (A), if a
fiduciary is unable to distinguish between or among
investment alternatives or investment courses of action
on the basis of pecuniary factors alone, the fiduciary
may use non-pecuniary factors as the deciding factor if
the fiduciary documents--
``(i) why pecuniary factors were not
sufficient to select a plan investment or
investment course of action;
``(ii) how the selected investment compares
to the alternative investments with regard to
the composition of the portfolio with regard to
diversification, the liquidity and current
return of the portfolio relative to the
anticipated cash flow requirements of the plan,
and the projected return of the portfolio
relative to the funding objectives of the plan;
and
``(iii) how the selected non-pecuniary
factor or factors are consistent with the
interests of the participants and beneficiaries
in their retirement income or financial
benefits under the plan.
``(C) Investment alternatives for participant-
directed individual account plans.--In selecting or
retaining investment options for a pension plan
described in subsection (c)(1)(A), a fiduciary is not
prohibited from considering, selecting, or retaining an
investment option on the basis that such investment
option promotes, seeks, or supports one or more non-
pecuniary benefits or goals, if--
``(i) the fiduciary satisfies the
requirements of paragraph (1) and subparagraphs
(A) and (B) of this paragraph in selecting or
retaining any such investment option; and
``(ii) such investment option is not added
or retained as, or included as a component of,
a default investment under subsection (c)(5)
(or any other default investment alternative)
if its investment objectives or goals or its
principal investment strategies include,
consider, or indicate the use of one or more
non-pecuniary factors.
``(D) Definitions.--For the purposes of this
paragraph:
``(i) The term `pecuniary factor' means a
factor that a fiduciary prudently determines is
expected to have a material effect on the risk
or return of an investment based on appropriate
investment horizons consistent with the plan's
investment objectives and the funding policy
established pursuant to section 402(b)(1).
``(ii) The term `investment course of
action' means any series or program of
investments or actions related to a fiduciary's
performance of the fiduciary's investment
duties, and includes the selection of an
investment fund as a plan investment, or in the
case of an individual account plan, a
designated investment alternative under the
plan.''.
(b) Effective Date.--The amendments made by this section shall
apply to actions taken by a fiduciary on or after the date that is 12
months after the date of enactment of this Act.

DIVISION B--NO DISCRIMINATION IN MY BENEFITS

SEC. 2001. SHORT TITLE.

This division may be cited as the ``No Discrimination in My
Benefits Act''.

SEC. 2002. SERVICE PROVIDER SELECTION.

Section 404(a)(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1104(a)(1)) is amended--
(1) in subparagraph (C), by striking ``and'';
(2) in subparagraph (D), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) by selecting, monitoring, and retaining any
fiduciary, counsel, employee, or service provider of the plan--
``(i) in accordance with subparagraphs (A) and (B);
and
``(ii) without regard to race, color, religion,
sex, or national origin.''.

DIVISION C--RETIREMENT PROXY PROTECTION

SEC. 3001. SHORT TITLE.

This division may be cited as the ``Retirement Proxy Protection
Act''.

SEC. 3002. EXERCISE OF SHAREHOLDER RIGHTS.

(a) In General.--Section 404 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end
the following new subsection:
``(f) Exercise of Shareholder Rights.--
``(1) Authority to exercise shareholder rights.--
``(A) In general.--The fiduciary duty to manage
plan assets that are shares of stock includes the
management of shareholder rights appurtenant to those
shares, including the right to vote proxies. When
deciding whether to exercise a shareholder right and in
exercising such right, including the voting of proxies,
a fiduciary must act prudently and solely in the
interests of participants and beneficiaries and for the
exclusive purpose of providing benefits to participants
and beneficiaries and defraying the reasonable expenses
of administering the plan. The fiduciary duty to manage
shareholder rights appurtenant to shares of stock does
not require the voting of every proxy or the exercise
of every shareholder right.
``(B) Exception.--This subsection shall not apply
to voting, tender, and similar rights with respect to
securities that are passed through pursuant to the
terms of an individual account plan to participants and
beneficiaries with accounts holding such securities.
``(2) Requirements for exercise of shareholder rights.--A
fiduciary, when deciding whether to exercise a shareholder
right and when exercising a shareholder right--
``(A) shall--
``(i) act solely in accordance with the
economic interest of the plan and its
participants and beneficiaries;
``(ii) consider any costs involved;
``(iii) evaluate material facts that form
the basis for any particular proxy vote or
exercise of shareholder rights; and
``(iv) maintain a record of any proxy vote,
proxy voting activity, or other exercise of a
shareholder right, including any attempt to
influence management; and
``(B) shall not subordinate the interests of
participants and beneficiaries in their retirement
income or financial benefits under the plan to any non-
pecuniary objective, or promote non-pecuniary benefits
or goals unrelated to those financial interests of the
plan's participants and beneficiaries.
``(3) Monitoring.--A fiduciary shall exercise prudence and
diligence in the selection and monitoring of a person, if any,
selected to advise or otherwise assist with the exercise of
shareholder rights, including by providing research and
analysis, recommendations on exercise of proxy voting or other
shareholder rights, administrative services with respect to
voting proxies, and recordkeeping and reporting services.
``(4) Investment managers and proxy advisory firms.--Where
the authority to vote proxies or exercise other shareholder
rights has been delegated to an investment manager pursuant to
section 403(a), or a proxy voting advisory firm or other person
who performs advisory services as to the voting of proxies or
the exercise of other shareholder rights, a responsible plan
fiduciary shall prudently monitor the proxy voting activities
of such investment manager or advisory firm and determine
whether such activities are in compliance with paragraphs (1)
and (2).
``(5) Voting policies.--
``(A) In general.--In deciding whether to vote a
proxy pursuant to this subsection, the plan fiduciary
may adopt a proxy voting policy, including a safe
harbor proxy voting policy described in subparagraph
(B), providing that the authority to vote a proxy shall
be exercised pursuant to specific parameters designed
to serve the economic interest of the plan.
``(B) Safe harbor voting policy.--With respect to a
decision not to vote a proxy, a fiduciary shall satisfy
the fiduciary responsibilities under this subsection if
such fiduciary adopts and is following a safe harbor
proxy voting policy that--
``(i) limits voting resources to particular
types of proposals that the fiduciary has
prudently determined are substantially related
to the business activities of the issuer or are
expected to have a material effect on the value
of the plan investment; or
``(ii) establishes that the fiduciary will
refrain from voting on proposals or particular
types of proposals when the assets of a plan
invested in the issuer relative to the total
assets of such plan are below 5 percent (or, in
the event such assets are under management,
when the assets under management invested in
the issuer are below 5 percent of the total
assets under management).
``(C) Exception.--No proxy voting policy adopted
pursuant to this paragraph shall preclude a fiduciary
from submitting a proxy vote when the fiduciary
determines that the matter being voted on is expected
to have a material economic effect on the investment
performance of a plan's portfolio (or the investment
performance of assets under management in the case of
an investment manager); provided, however, that in all
cases compliance with a safe harbor voting policy shall
be presumed to satisfy fiduciary responsibilities with
respect to decisions not to vote.
``(6) Review.--A fiduciary shall periodically review any
policy adopted under this subsection.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to an exercise of shareholder rights occurring on or after
January 1, 2024.

DIVISION D--PROVIDING COMPLETE INFORMATION TO RETIREMENT INVESTORS

SEC. 4001. SHORT TITLE.

This division may be cited as the ``Providing Complete Information
to Retirement Investors Act''.

SEC. 4002. BROKERAGE WINDOW DISCLOSURES.

(a) In General.--Section 404(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the
end the following new paragraph:
``(7) Notice requirements for brokerage windows.--
``(A) In general.--In the case of a pension plan
which provides for individual accounts and which
provides a participant or beneficiary the opportunity
to choose from designated investment alternatives, a
participant or beneficiary shall not be treated as
exercising control over assets in the account of the
participant or beneficiary unless, with respect to any
investment arrangement that is not a designated
investment alternative, each time before such a
participant or beneficiary directs an investment into,
out of, or within such investment arrangement, such
participant is notified of, and acknowledges, each
element of the notice described under paragraph (B).
``(B) Notice.--The notice described under this
paragraph is a four part information that is
substantially similar to the following information:

``1. Your retirement plan offers designated investment alternatives prudently selected and monitored by
fiduciaries for the purpose of enabling you to construct an appropriate retirement savings portfolio. In
selecting and monitoring designated investment alternatives, your plan's fiduciary considers the risk of loss
and the opportunity for gain (or other return) compared with reasonably available investment alternatives.
2. The investments available through this investment arrangement are not designated investment alternatives, and
have not been prudently selected and are not monitored by a plan fiduciary.
3. Depending on the investments you select through this investment arrangement, you may experience diminished
returns, higher fees, and higher risk than if you select from the plan's designated investment alternatives.
4. The following is a hypothetical illustration of the impact of return at 4 percent, 6 percent, and 8 percent
on your account balance projected to age 67.

``(C) Illustration.--The notice described under
paragraph (B) shall also include a graph displaying the
projected retirement balances of such participant or
beneficiary at age 67 if the account of such individual
were to achieve an annual return equal to each of the
following:
``(i) 4 percent.
``(ii) 6 percent.
``(iii) 8 percent.''.
(b) Designated Investment Alternative Defined.--Section 3 of such
Act (29 U.S.C. 1002) is amended by adding at the end the following new
paragraph:
``(46) Designated investment alternative.--
``(A) In general.--The term `designated investment
alternative' means any investment alternative
designated by a responsible fiduciary of an individual
account plan described in subsection 404(c) into which
participants and beneficiaries may direct the
investment of assets held in, or contributed to, their
individual accounts.
``(B) Exception.--The term `designated investment
alternative' does not include brokerage windows, self-
directed brokerage accounts, or similar plan
arrangements that enable participants and beneficiaries
to select investments beyond those designated by a
responsible plan fiduciary.''.
(c) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2025.

Passed the House of Representatives September 18, 2024.

Attest:

KEVIN F. MCCUMBER,

Clerk.

H.R. 5339 (RFS) - Protecting Americans’ Investments from Woke Policies Act

Bill Metadata

Actions