WASHINGTON – Tuesday, Sens. Braun, Burr, Tuberville, Lummis, Marshall, Wicker, Daines, and Inhofe introduced legislation to build a stronger retirement system for Americans by clarifying the fiduciary duty of plan administrators to select and maintain investments based solely on financial factors. Recently, the Biden Administration Department of Labor proposed a rule that would essentially coerce workers and businesses into supporting corporations deemed “woke” through ESG (environmental, social, and governance) funds.
A number of studies have shown that ESG investing policies have worse rates of return. In comparison to other investment plans, ESG investors generally end up paying higher costs for worse performances.
“At a time when energy costs are soaring and Hoosiers are grappling with record high inflation, Democrats are politicizing American retirement funds and targeting companies that invest in energy sources that could help alleviate these soaring costs. The Biden Administration should not be sacrificing the retirement savings of thousands of individuals to promote liberal policy objectives,” said Senator Mike Braun.
“When retirement savers use financial advisors with a fiduciary responsibility to invest their money, they should be confident that their economic best interests are their asset manager’s top priority. Unfortunately, investment managers are increasingly being pressured by the left to factor in companies’ environmental, social, and corporate governance practices in investment decisions. This bill protects investors by ensuring investment managers only consider financial risk and return when investing on behalf of Americans saving for retirement. It’s my hope that Americans, who are already struggling with inflation’s negative impact on their investment accounts, will be protected from fiduciaries investing their money in ways that are not financially beneficial to them,” said Senator Tommy Tuberville.
“Retirement funds should be invested based on their long-term fiscal performance, not based on the political and social whims of the day. Employees in Wyoming are working hard, and they want to know that their investments are financially sound. They are focused on being able to retire and provide for their families, not on if their investments are woke or popular. The Biden administration should put more effort into righting our economy instead of bowing to progressive pressure,” said Senator Cynthia Lummis.
“Inflation is already crushing Kansans’ hard-earned retirement savings. This is largely driven by the Democrats’ out-of-control spending and drastically increased energy costs. The Biden Administration is now looking to further advance their war against American energy by forcing companies to make extreme commitments to climate change and social justice to be eligible for investments. I hear all the time how these radical policies are harming Kansas energy producers’ ability to gain access to capital and they will diminish the value of Kansans’ investment funds. I’m pleased to join Sen. Braun to fight back against this misguided and harmful policy,” said Senator Roger Marshall.
“Most Americans trust their retirement plan administrators to look out for them and maximize their return on investments, but recent moves by the Biden Administration threaten to upend this longstanding system in favor of “woke” activism. Retirement accounts should be off-limits to the President’s politics,” said Senator Roger Wicker.
“Montanans’ don’t want to see woke CEOs play politics with their hard-earned retirement savings. Congress must ensure that folks’ retirement funds are being invested responsibly – not at the whim of President Biden’s far-Left agenda,” said Senator Steve Daines.
“Oklahomans are suffering the consequences of the Biden administration’s far-left policies. Even as we deal with record-high inflation, this administration continues to push for more extreme spending and radical policies that will only make the damage worse. They’ve proposed a rule that could coerce workers and businesses into supporting organizations that promote these radical ideologies, putting American retirement accounts at risk in the process. That’s why I am glad to join Sen. Braun in introducing legislation to protect our retirement system and ensure it is not undermined through outlandish rules like this,” said Senator Jim Inhofe.
What the Maximize Americans’ Retirement Security Act does:
- Amends the Employee Retirement Income Security Act (ERISA) to require plan fiduciaries to select investments solely on pecuniary factors.
- If a fiduciary cannot distinguish between investments on pecuniary factors alone they may use non-pecuniary factors but must provide participants with reasoning for their decision.
- Pecuniary factors are defined as any factors that a fiduciary prudently determine is expected to have a material effect on the risk or return of an investment.
This legislation has been endorsed by:
- Americans for Tax Reform
- Institute for the American Worker
- Foundation for Government Accountability
Bill text here.