To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to limit fiduciary consideration of non-pecuniary factors in investment decision-making.

Bill: 117-hr-9198
Sponsor: full_name: Rep. Murphy, Gregory [R-NC-3]
Introduced: 2022-10-18
Policy area: Labor and Employment
Latest action: action_date: 2022-10-18
text: Referred to the Committee on Education and Labor, and in addition to the Committee on Ways and Means, 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 committee concerned.

Summaries:
action_date: 2022-10-18
action_desc: Introduced in House
text: <p>This bill generally requires fiduciaries of employer-sponsored retirement plans to make investment decisions based only on pecuniary factors (i.e., factors that a fiduciary prudently determines are expected to have a material effect on the risk and return of an investment based on appropriate investment horizons consistent with the plan's policies and objectives).</p> <p>The bill allows nonpecuniary factors to be considered when selecting investment options for certain participant-directed retirement plans if specified requirements are met (e.g., the investment option is not a default investment). </p> <p>Further, if a plan includes investment options based on nonpecuniary factors, it also must include investment options that are not based on any such factors.</p>

tv_txt: I 117th CONGRESS 2d Session H. R. 9198 IN THE HOUSE OF REPRESENTATIVES October 18, 2022 Mr. Murphy of North Carolina (for himself, Mrs. Miller of West Virginia , Mr. Schweikert , and Mr. Smucker ) introduced the following bill; which was referred to the Committee on Education and Labor , and in addition to the Committee on Ways and Means , 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 committee concerned A BILL To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to limit fiduciary consideration of non-pecuniary factors in investment decision-making.

1. Fiduciary responsibilities relating to certain non-pecuniary objectives 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 new paragraph: (3) Interest based on non-Pecuniary factors (A) In general For purposes of paragraph (1), a fiduciary of a plan shall be considered to act solely in the interest of the participants and beneficiaries of the plan with respect to a plan investment or investment course of action only if the fiduciary’s action with respect to such investment is based only on pecuniary factors. 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 should appropriately reflect a prudent assessment of the impact of such factor on risk-return. (B) Investment alternatives for participant-directed individual account plans In selecting investment options for a pension plan described in subsection (c)(1)(A), a fiduciary is not prohibited from considering or including an investment option on the basis that such investment option promotes non-pecuniary benefits or goals, provided that the fiduciary— (i) satisfies the requirements of paragraph (1) and subparagraph (A) in considering or including any such investment option; and (ii) does not consider or include such investment option as a default investment (as defined in the regulations issued by the Secretary under subsection (c)(5)(A)), or a component thereof. (C) Pecuniary factor defined For the purposes of this paragraph, the term pecuniary factor means a factor that a fiduciary prudently determines is expected to have a material effect on the risk and 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). . 2. Requirement that retirement plans continue to offer investments based solely on pecuniary factors (a) In general Section 401(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (39) Defined contribution plan investment option requirements In the case of a trust forming part of a defined contribution plan which includes investment options based on non-pecuniary factors (within the meaning of section 404(a)(3) of the Employee Retirement Income Security Act of 1974), such trust shall not constitute a qualified trust unless the plan includes investment options not based on any such factors. . (b) 403(b) plans Section 403(b)(7) of such Code is amended by adding at the end the following new subparagraph: (D) Investment option requirements Subparagraph (A) shall not apply to an amount unless under the custodial account meets investment option requirements similar to the requirements of section 401(a)(39). . (c) 457(b) plans Section 457(e) of such Code is amended by adding at the end the following new paragraph: (19) Investment option requirements In the case of an employer described in subsection (e)(1)(A), a plan shall not be treated as meeting the requirements of this section unless such plan meets investment option requirements similar to the requirements of section 401(a)(39). . (d) Effective date The amendments made by this section shall apply to plan years beginning after the date of the enactment of this Act.