The House of Representatives has passed H.R. 2988, known as the Protecting Prudent Investment of Retirement Savings Act. The bill was authored by Rick Allen (R-GA), chairman of the Health, Employment, Labor, and Pensions Subcommittee. It aims to ensure that fiduciaries managing retirement savings focus on maximizing financial returns rather than considering political or social factors such as environmental, social, and governance (ESG) criteria.
Education and Workforce Committee Chairman Tim Walberg (R-MI) expressed his support for the bill's passage. He stated, “The Biden-Harris administration’s ESG rule abandoned longstanding fiduciary protections and allowed politics to creep into retirement investment decisions. This is an egregious mistake that puts the savings of retirees at risk. H.R. 2988 restores clarity and accountability by making clear that fiduciaries must put financial returns first. I’m proud to see this bill pass the House and urge my colleagues in the Senate to follow suit and restore common sense to retirement investing.”
The legislation clarifies that financial institutions must base investment decisions solely on economic factors. It also specifies that exercising shareholder rights must adhere to prudence and loyalty duties under the Employee Retirement Income Security Act (ERISA). Additionally, it requires proxies held by ERISA plans to be voted in the economic interest of the plan rather than for advancing specific policies.
Other provisions include a prohibition against considering race, color, religion, sex, or national origin when selecting fiduciaries or service providers for ERISA plans. The bill also introduces a notice requirement for defined contribution plans so participants understand the difference between investments selected by ERISA fiduciaries and those available through brokerage windows.
