Protecting Prudent Investment of Retirement Savings Act
Summary
The "Protecting Prudent Investment of Retirement Savings Act" amends the Employee Retirement Income Security Act of 1974 (ERISA). It aims to ensure that fiduciaries prioritize pecuniary factors when making investment decisions for retirement plans. The act also addresses service provider selection, shareholder rights, and brokerage window disclosures.
Expected Effects
This act will likely lead to changes in how retirement plan fiduciaries make investment decisions. It emphasizes financial returns over non-pecuniary factors, potentially impacting investments considering environmental, social, and governance (ESG) factors. The act also introduces new disclosure requirements for brokerage windows and mandates a GAO study on their performance.
Potential Benefits
- Ensures fiduciaries prioritize financial returns for retirement savers.
- Enhances transparency through brokerage window disclosures.
- Protects against discrimination in service provider selection.
- Requires fiduciaries to act solely in the economic interest of the plan when exercising shareholder rights.
- Provides a safe harbor for proxy voting policies.
Most Benefited Areas:
Potential Disadvantages
- May limit consideration of ESG factors in investment decisions.
- Could lead to underperformance if non-pecuniary factors are ignored.
- Increased compliance burden for fiduciaries due to documentation requirements.
- Potential for discouraging socially responsible investing.
- May disproportionately affect investment options that consider social or environmental impact.
Most Disadvantaged Areas:
Constitutional Alignment
The act primarily relates to economic regulations and does not directly infringe upon any specific constitutional rights. Congress has the power to regulate commerce, including retirement plans, under Article I, Section 8. The provisions against discrimination in service provider selection align with the principles of equal protection, although the Constitution primarily applies to state action, and this act regulates private entities administering retirement plans.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).