WASHINGTON, D.C, – Yesterday, Senator Jim Banks (R-Ind.) introduced the Providing Complete Information to Retirement Investors Act. This bill would require retirement plans to help workers better understand their investment options by clearly explaining the difference between professionally managed funds and self-directed investments. Additionally, it would explain the risks to participants when they move money into non-fiduciary options. Senator Bill Cassidy (R-La.) is an original cosponsor of this bill.
Senator Jim Banks: (R-Ind.): “Americans work hard for their retirement, and their money should be working for them, not to fund the Left’s woke agenda. This bill makes sure retirees know exactly where their savings are going so they can invest with confidence and common sense.”
Senator Bill Cassidy (R-La.): “Fiduciaries’ sole responsibility is to prioritize what is best for the workers’ hard-earned savings. These pro-worker, pro-family bills protect millions of Americans’ retirement savings from political ideology.”
Key Provisions of the Providing Complete Information to Retirement Investors Act are:
- Requires employer-sponsored defined contribution plans to explain to participants the difference between choosing investments selected by Employee Retirement Income Security Act (ERISA) fiduciaries and those self-selected through a brokerage window.
- Requires ERISA-governed plans to provide a notice to investors each time they allocate money into or out of a brokerage window that such investments were not selected by a fiduciary and may result in lower returns.
Full text of the bill can be found here.
Background:
In recent years, left-wing investment firms have mismanaged the hard-earned retirement savings of millions of Americans through so-called “Environmental, Social, Governance” (ESG) plans. ESG funds intentionally prioritize left-wing social priorities over business fundamentals when they select investments. Several academic studies have found that ESG funds result in lower returns for investors. Some ESG funds have sought greater business by soliciting 401(k) investors to self-direct their retirement savings through a “brokerage window.” This poses increased risk for investors, as investment plans selected through a brokerage window do not have a fiduciary responsibility to look out for the investor’s best interests.
This bill passed the U.S. House of Representatives in September 2023 as part of the Roll Back ESG To Increase Retirement Earnings Act.
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