Bill Details
HR.1996 - 119th Congress
Status
Latest action
2025-03-10 - Referred to the House Committee on Education and Workforce.
Introduced Date
2025-03-10
Policy Area
Labor and Employment
Committees
View committees (1)
Sponsors
Cosponsors
View cosponsors (2)
8
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AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would change federal retirement law to give clearer rules for how retirement plan managers use shareholder rights, such as voting company proxies, when the plan owns stocks. It says these decisions must be made carefully and only for the financial benefit of plan participants and beneficiaries, not for outside social or political goals. The bill also says managers do not have to vote every proxy, but if they do vote or delegate that work to others, they must keep records, watch those helpers closely, and review their voting policies regularly. It would also let fiduciaries use a “safe harbor” voting policy that limits voting to matters likely to affect the value of the investment, or allows them not to vote when the plan’s stake in the company is very small. The new rules would start on January 1, 2026.
- Retirement plan fiduciaries would be treated as responsible for managing shareholder rights, including proxy voting, when plan assets are invested in company stock.
- When deciding whether to vote, they must act only in the financial interest of participants and beneficiaries, consider costs, review the facts, and keep records of their voting and influence efforts.
- They would not be allowed to put non-financial goals ahead of retirement savings interests.
- The bill allows safer voting policies that focus on votes tied to the company’s business or the value of the investment, and it requires periodic review of any policy used.
Official Summaries
No summaries available
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1996 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 1996
To amend the Employee Retirement Income Security Act of 1974 to clarify
the application of prudence and exclusive purpose duties to the
exercise of shareholder rights.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 10, 2025
Mrs. Houchin (for herself, Mr. Owens, and Mr. Grothman) introduced the
following bill; which was referred to the Committee on Education and
Workforce
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to clarify
the application of prudence and exclusive purpose duties to the
exercise of shareholder rights.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Retirement Proxy Protection Act''.
SEC. 2. 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, 2026.
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