An Act to Protect the Retirement of State Employees and Teachers by Establishing Standards for Fiduciary Responsibility
Maine Legislature, Session 131, LD 1562
Committee: Labor and Housing
Sponsors: PERKINS, BRAKEY, ANDREWS, ARDELL, FAULKINGHAM, HYMES, PAUL, QUINT, SOBOLESKI, WHITE
Amends: 5 MRSA §17063

Legislative Document
No. 1562
H.P. 1007
House of Representatives, April 11, 2023
An Act to Protect the Retirement of State Employees and Teachers 
by Establishing Standards for Fiduciary Responsibility
Reference to the Committee on Labor and Housing suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative PERKINS of Dover-Foxcroft.
Cosponsored by Senator BRAKEY of Androscoggin and
Representatives: ANDREWS of Paris, ARDELL of Monticello, FAULKINGHAM of Winter 
Harbor, HYMES of Waldo, PAUL of Winterport, QUINT of Hodgdon, SOBOLESKI of 
Phillips, WHITE of Guilford.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  5 MRSA §17063 is enacted to read:
§17063.  Fiduciary responsibility
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A. "Fiduciary" means a person that:
(1) Exercises any discretionary authority or discretionary control relating to 
management of a plan;
(2) Exercises any authority or control relating to management or disposition of a 
plan's assets;
(3) Has authority to render investment advice for a fee or other compensation, 
direct or indirect, with respect to any money or other property of a plan; or
(4) Has any discretionary authority or discretionary responsibility in the 
administration of a plan, including making recommendations or voting a plan's 
shares or proxies.
B. "Material" means, with respect to a risk or return, that there is a substantial 
likelihood that a reasonable investor would attach importance when evaluating the 
potential financial return and financial risks of an existing or prospective investment 
or exercising or declining to exercise any rights appurtenant to securities.  "Material" 
does not include furthering nonpecuniary goals or objectives or any portion of a risk or 
return that primarily relates to events that involve a high degree of uncertainty 
regarding what may or may not occur in the distant future and are systemic, general or 
not investment-specific in nature.
C. "Nonpecuniary" means, with respect to a factor considered by a fiduciary, that the 
factor has a purpose to further environmental, social, corporate governance, ideological 
or political goals.
D. "Pecuniary" means, with respect to a factor, that the factor has a material effect on 
the financial risk or financial return of an investment based on appropriate investment 
horizons consistent with the plan's investment objectives and the funding policy.
E. "Plan" means any plan, fund or program that is established, maintained or offered 
by the retirement system and that, by its terms or as a result of surrounding 
circumstances, provides retirement benefits to employees or former employees or 
results in a deferral of income by such employees for a period extending to the 
termination of covered employment or beyond.
2.  Fiduciary standard.  A fiduciary shall discharge its duties with respect to a plan in 
the pecuniary interest of the participants and beneficiaries and in accordance with this 
subsection.  A fiduciary shall discharge its duties:
A. For the purposes of:
(1) Providing pecuniary benefits to participants and their beneficiaries; and
(2) Defraying reasonable expenses of administering the plan.
A fiduciary purpose may be reasonably determined by evidence, including, but not 
limited to, a fiduciary's statements indicating its purpose in selecting investments, 
engaging with portfolio companies or voting shares or proxies, or any such statements 
by any coalition, initiative or organization that the fiduciary has joined, participated in 
or become a signatory to, in its capacity as a fiduciary;
B. With the care, skill, prudence and diligence under the circumstances then prevailing 
that a prudent person acting in a like capacity and familiar with such matters would use 
in the conduct of an enterprise of a like character and with like aims;
C. By diversifying the investments of the plan in order to minimize the risk of large 
losses, unless under the circumstances it is clearly prudent not to do so; and
D. In accordance with the documents and instruments governing the plan that are 
consistent with the provisions of this section.
3.  Consideration of nonpecuniary factors prohibited.  A fiduciary's evaluation of 
an investment, or evaluation or exercise of any right appurtenant to an investment, must 
take into account only pecuniary factors.  A fiduciary:
A. May not promote nonpecuniary benefits or any other nonpecuniary goals; and
B. May consider nonpecuniary benefits only if the factors present economic risks or 
opportunities that qualified investment professionals would treat as material economic 
considerations under generally accepted investment theories.  A fiduciary shall 
evaluate those factors to:
(1) Prudently assess the impact of the factors on risk and return;
(2) Examine the level of diversification, degree of liquidity and the potential return 
or risk in comparison with other available alternative investments that would play 
a similar role in the plans' portfolios; and
(3) Determine whether greater returns can be achieved through investments that 
rank poorly on environmental, social or governance factors.
4.  Voting ownership interests.  This subsection governs voting ownership interests.
A. All shares held directly or indirectly by or on behalf of a plan or the beneficiaries 
thereof must be voted solely in the pecuniary interest of plan participants. Voting to 
further nonpecuniary benefits is prohibited.
B. A fiduciary may not adopt a practice of following the recommendations of a proxy 
advisory firm or other service provider unless the firm or service provider has a practice 
of, and in writing commits to, following proxy voting guidelines that are consistent 
with the fiduciary's obligation to act based only on pecuniary factors.
C. Plan assets may not be entrusted to a fiduciary unless that fiduciary has a practice 
of, and in writing commits to, following guidelines when engaging with portfolio 
companies and voting shares or proxies that match the State's obligation to act based 
only on pecuniary factors.
D. Authority to vote shares under this subsection resides with the board, whose 
members must have a practice of, and in writing commit to, following guidelines that 
match the State's obligation to act based only on pecuniary factors.
E. All proxy votes must be tabulated and reported annually to the Treasurer of State. 
For each vote, the report must contain a vote caption, the plan's vote, the 
recommendation of company management and, if applicable, the proxy advisor's 
recommendation. These reports must be posted on a publicly available webpage on the 
board's website.
5.  Enforcement.  This section is enforced by the Attorney General.  If the Attorney 
General has reasonable cause to believe that a person has engaged in, is engaging in or is 
about to engage in a violation of this section, the Attorney General may:
A. Require the person to file on such forms as the Attorney General prescribes a 
statement or report in writing, under oath, as to all the facts and circumstances 
concerning the suspected violation, and any other data and information considered 
necessary by the Attorney General;
B. Examine under oath any person in connection with the suspected violation;
C. Examine any record, book, document, account or paper as considered necessary by 
the Attorney General; and
D. Pursuant to an order of the Superior Court, impound any record, book, document, 
account, paper or sample or material relating to the suspected violation and retain the 
same in the Attorney General's possession until the completion of all proceedings 
undertaken under this section or in the courts.
SUMMARY
This bill establishes certain standards of care for fiduciaries of the Maine Public 
Employees Retirement System and generally prohibits decision making with regard to 
investments in the retirement system based on certain nonpecuniary factors such as 
environmental, social, corporate governance, ideological or political factors.