Retirement Savings Modernization Act Introduced
Senators Tim Scott (R-SC), and Pat Toomey (R-PA), along with Representative Peter Meijer (R-MI), have introduced the Retirement Savings Modernization Act in the Senate and House respectively. According to a press release, the legislation would enhance retirement savings through access to a wide range of alternative assets and reflect the demands of the modern workforce. The proposal would amend Section 404(a) of ERISA to provide that a fiduciary shall not be liable for a breach of duty solely for recommending, selecting, or monitoring any ‘covered investment’ option for a plan. A list of covered investments is defined as, but is not limited to the following
- Commodities
- Debt, including public and private credit
- Digital assets
- Hedge funds
- Infrastructure
- Insured products and annuities
- Private equity
- Real assets
- Real estate or real estate-related securities
- Securities listed on a national securities exchange
- Venture capital
- An investment in any fund, comingled account, or pooled investment vehicle that invests in any investment, including but not limited to an investment described above
The press release acknowledges a Georgetown study that found that modest diversification to alternative asset classes would increase savings and reduce losses in a downturn. The release further concludes that plan fiduciaries must still select investments through a prudent process, and the bill explicitly does not create a safe harbor from a fiduciary’s legal duties.
The proposal appears to be in part a response to Department of Labor guidance issued and announced in March.
