I 
113TH CONGRESS 
2D SESSION 
H. R. 5877 
To amend the Employee Retirement Income Security Act of 1974 and title 
5, United States Code, to require plans to establish policies addressing 
firm-specific risks in asset management services, greater diversification 
in investment strategies, and the inclusion of diverse asset managers 
and minority brokerage firms, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 11, 2014 
Mr. MEEKS (for himself and Ms. WATERS) introduced the following bill; which 
was referred to the Committee on Oversight and Government Reform, 
and in addition to the Committee on Education and the Workforce, for 
a period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To amend the Employee Retirement Income Security Act 
of 1974 and title 5, United States Code, to require 
plans to establish policies addressing firm-specific risks 
in asset management services, greater diversification in 
investment strategies, and the inclusion of diverse asset 
managers and minority brokerage firms, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘American Pension In-
vestments Modernization Act of 2014’’. 
SEC. 2. CONSIDERATION OF FIRM-SPECIFIC RISKS AND IN-
CLUSION OF DIVERSE ASSET MANAGERS IN 
ERISA PLANS. 
(a) IN GENERAL.—Section 404(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1104(a)) is amended— 
(1) in paragraph (1)— 
(A) in subparagraph (C), by striking 
‘‘and’’ at the end; 
(B) by designating subparagraph (D) as 
subparagraph (E); and 
(C) by inserting after subparagraph (C) 
the following: 
‘‘(D) in any case in which the fiduciary ap-
points an investment manager or managers to man-
age any assets of a plan under section 402(c)(3), or 
business enterprise or enterprises for brokerage and 
investment banking services, by establishing policies 
under which the fiduciary will consider— 
‘‘(i) the concentration level of the plan’s 
exposure to firm-specific risks, including oper-
ational, compliance, and fraud risks; 
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‘‘(ii) the inclusion, to the greatest extent 
feasible, of minority business enterprises for 
brokerage and investment banking services; and 
‘‘(iii) the utilization of diverse asset man-
agers, taking into consideration the investment 
opportunities they offer in sectors, strategies, 
geographies, and demographics not meaning-
fully available to the plans.’’; and 
(2) by inserting at the end the following: 
‘‘(3)(A) For purposes of this subsection, the term 
‘minority business enterprise’ means any business entity— 
‘‘(i) not less than 51 percent of which is owned 
by one or more individuals described in subpara-
graph (C) or, in the case of any publicly owned busi-
ness, not less than 51 percent of the stock of which 
is owned by such individuals; or 
‘‘(ii)(I) not less than 35 percent of which is 
owned by one or more individuals described in sub-
paragraph (C) or, in the case of any publicly owned 
business, not less than 35 percent of the stock of 
which is owned by such individuals; and 
‘‘(II) the management and daily business oper-
ations of which are controlled by one or more indi-
viduals described in subparagraph (C). 
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‘‘(B) For purposes of this subsection, the term ‘di-
verse asset manager’ means a minority business enterprise 
that manages an investment portfolio of at least 
$100,000,000 and not more than $25,000,000,000. 
‘‘(C) An individual described in this subparagraph 
is— 
‘‘(i) an African-American, Hispanic-American, 
Asian Pacific American, Subcontinent Asian Amer-
ican, or Native American; 
‘‘(ii) a woman; or 
‘‘(iii) a veteran (as defined in section 101(2) of 
title 38, United States Code).’’. 
(b) ISSUANCE
OF GUIDANCE
BY SECRETARY
OF 
LABOR.—Not later than 1 year after the date of the enact-
ment of this Act, the Secretary of Labor shall issue guid-
ance relating to the requirement imposed by section 
404(a)(1)(D) of such Act (as amended by subsection (a)). 
In issuing guidance under this subsection, the Secretary 
of Labor shall consider successful practices from State, 
local, and private-sector retirement systems’ utilization of 
diverse and emerging asset managers and of minority 
business enterprises for brokerage and investment banking 
services, including established efforts, programs, plans, 
and goals designed to increase their participation in finan-
cial services, and providing pension plans with greater ac-
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cess to investment opportunities that may otherwise be 
overlooked. 
SEC. 3. CONSIDERATION OF FIRM-SPECIFIC RISKS AND IN-
CLUSION OF DIVERSE ASSET MANAGERS IN 
THE THRIFT SAVINGS PLAN. 
(a) IN GENERAL.—Section 8472 of title 5, United 
States Code, is amended by adding at the end the fol-
lowing: 
‘‘(k) In establishing policies under subsection 
(f)(1)(A), the Board shall take into account the guidance 
issued by the Secretary of Labor pursuant to section 
404(a)(1)(D) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1104(a)).’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
8477(b)(1)(C) of such title is amended by inserting after 
‘‘of this title,’’ the following: ‘‘and consistent with the poli-
cies developed under section 8472(k),’’. 
SEC. 4. ACTIVE MANAGEMENT OPTION UNDER THE THRIFT 
SAVINGS PLAN. 
(a) IN GENERAL.—Subchapter III of chapter 84 of 
title 5, United States Code, is amended by inserting at 
the end the following: 
‘‘§ 8440g. Active management option 
‘‘(a) The Board shall provide employees and Members 
and former employees or Members the option to partici-
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pate in actively managed funds within such employee or 
Member’s Thrift Savings Fund account. Such option or 
options shall allow not more than 20 percent of an em-
ployee or Member’s (or former employee or Member’s) 
funds to be actively managed. 
‘‘(b) Notwithstanding the requirement of subsection 
(a), the Board may not subject more than 20 percent of 
the total assets under management of the Thrift Savings 
Fund to active management. 
‘‘(c) The Board shall promulgate guidelines regarding 
the active management of funds under this section. In pro-
mulgating such guidelines, the Board shall consider mod-
ern and successful practices from State, local, and private- 
sector retirement systems’ utilization of active manage-
ment strategies in order to— 
‘‘(1) reduce market downside risks to the best 
extent possible, including dramatic swings in major 
market indexes; 
‘‘(2) take advantage of research and investment 
opportunities offered by small-, minority-, women- 
and veteran-owned firms that specialize in less tradi-
tional asset classes, or less efficient market segments 
with high-growth potentials, including investments in 
sectors, strategies, geographies and demographics 
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that are not meaningfully available to large passively 
invested funds; and 
‘‘(3) take advantage of more effective portfolio 
designs that diversify across active and passive in-
vestment strategies and managers.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such subchapter is amended by adding after the item 
relating to section 8440f the following new item: 
‘‘8440g. Active management option.’’. 
SEC. 5. REPORTS. 
Not later than 1 year after the issuance of guidance 
under section 2(b) and annually thereafter, the Secretary 
of Labor and the Chairman of the Federal Retirement 
Thrift Investment Board shall submit a report to Congress 
on the progress achieved and efforts being made to imple-
ment the amendments made by sections 2 and 3, respec-
tively. Such report shall include such recommendations as 
the Secretary and the Chairman, respectively, deem nec-
essary or appropriate. In addition, each report shall in-
clude— 
(1) an assessment of the extent to which com-
pliance with the requirements contained in such 
amendments is being achieved; 
(2) a summary of the enforcement actions 
taken by each of the agencies assigned administra-
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tive enforcement responsibilities for such require-
ments; 
(3) to the extent feasible, with respect to the 
Thrift Savings Plan and terminated plans within the 
meaning of title IV of the Employee Retirement In-
come Security Act of 1974— 
(A) a list of all asset management firms 
(minority-owned and others) to which plan 
funds were allocated, and the amount allocated 
to each asset management firm; 
(B) the fees charged by each asset man-
agement firm, including proceeds from security 
lending, if any; 
(C) the list of all firms (minority-owned 
and others) used for brokerage and investment 
banking services, and the amount of trans-
actions executed; and 
(D) the fees charged by each firm used for 
brokerage and investment banking services. 
SEC. 6. EFFECTIVE DATE. 
The amendments made by sections 2 and 3 shall 
apply with respect to plan years beginning at least 9 
months after the issuance of guidance under section 2(b). 
Æ 
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