```

[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.
```