Financial Factors in Selecting Retirement Plan Investments Act

II 117TH CONGRESS 1ST SESSION S. 1762 To amend the Employee Retirement Income Security Act of 1974 to permit retirement plans to consider certain factors in investment decisions. IN THE SENATE OF THE UNITED STATES MAY 20, 2021 Ms. SMITH (for herself, Mrs. MURRAY, and Mr. BLUMENTHAL) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Employee Retirement Income Security Act of 1974 to permit retirement plans to consider certain factors in investment decisions. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Financial Factors in 4 Selecting Retirement Plan Investments Act’’. 5 SEC. 2. ERISA AMENDMENTS. 6 (a) IN GENERAL.—Subsection (a) of section 404 of 7 the Employee Retirement Income Security Act of 1974 8 VerDate Sep 11 2014 04:25 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1762.IS S1762 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1762 IS (29 U.S.C. 1104) is amended by adding at the end the 1 following new paragraph: 2 ‘‘(3)(A) Provided that a fiduciary discharges the fidu- 3 ciary’s duties with respect to a plan in a manner otherwise 4 consistent with this subsection, a fiduciary may— 5 ‘‘(i) consider environmental, social, governance, 6 or similar factors, in connection with carrying out an 7 investment decision, strategy, or objective, or other 8 fiduciary act; and 9 ‘‘(ii) consider collateral environmental, social, 10 governance, or similar factors as tie-breakers when 11 competing investments can reasonably be expected to 12 serve the plan’s economic interests equally well with 13 respect to expected return and risk over the appro- 14 priate time horizon. 15 ‘‘(B) In a case described in clause (i) or (ii) of sub- 16 paragraph (A), a fiduciary shall not be required to main- 17 tain any greater documentation, substantiation, or other 18 justification of the fiduciary’s actions relating to such fi- 19 duciary act than is otherwise required under this part. 20 ‘‘(C) Nothing in this part shall preclude an invest- 21 ment selected in accordance with clause (i) or (ii) of sub- 22 paragraph (A) from being treated as a default investment 23 or a component of such a default investment (as described 24 in regulations issued by the Secretary under subsection 25 VerDate Sep 11 2014 04:25 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1762.IS S1762 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1762 IS (c)(5)(A)), if such investment would otherwise qualify for 1 such treatment under such regulations.’’. 2 (b) EFFECT ON REGULATIONS.—The rule entitled 3 ‘‘Financial Factors in Selecting Plan Investments’’, pub- 4 lished by the Employee Benefits Security Administration 5 of the Department of Labor on November 13, 2020 (85 6 Fed. Reg. 72846), shall cease to have force or effect on 7 the date of enactment of this Act. 8 Æ VerDate Sep 11 2014 04:25 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\S1762.IS S1762 kjohnson on DSK79L0C42PROD with BILLS