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The Protecting Prudent Investment of Retirement Savings Act, approved by the House of Representatives on Thursday, is a crucial step toward keeping manufacturing employees’ hard-earned retirement benefits safe from intermediaries with nonfinancial environmental, social or political motives, the NAM told Congress this week.

What’s going on: The legislation would direct retirement plan administrators to focus on financial factors when making investment and proxy voting decisions.

• “This bill would help ensure that participants and beneficiaries of retirement plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) receive their full pension benefits without having their savings jeopardized by intermediaries with political or social agendas,” the NAM told House leadership.
• The previous administration encouraged retirement plan fiduciaries to weigh environmental and social considerations when making investment decisions, which is not the intended purpose of ERISA, said the NAM.

How it works: The Protecting Prudent Investment of Retirement Savings Act, introduced by Rep. Rick Allen (R-GA), would seek to safeguard retirement benefits by codifying the Labor Department’s 2020 rules on financial factors and proxy voting.

• The bill would also give clarity to ERISA plan managers about their proxy voting obligations and prudent ESG-factor consideration in financial decisions. It would direct them to choose investments “based solely on pecuniary factors.”

Why it’s so important: “Pension plan participants and beneficiaries should be able to trust that their long-term savings will be protected so that they can enjoy a stable and secure retirement,” said NAM Senior Director of Corporate Finance Policy Ted Allen. “We thank the House for supporting this bill, and we encourage the Senate to approve this important legislation to ensure the retirement security of manufacturing employees.”