Senate Proposal Would Modify Fiduciary Investment Selection Requirements

Senator Mike Braun (R-IN) and seven republican co-sponsors have introduced S. 4613, the Maximize Americans’ Retirement Security Act. The bill would amend ERISA as follows:

• Require plan fiduciaries to select investments solely on pecuniary factors
• Require participant notification of an explanation of why pecuniary factors were not sufficient to select the investment and how non-pecuniary factors are consistent with the interests of participants if a fiduciary cannot distinguish between investments on pecuniary factors alone
• Define pecuniary factors as any factors that a fiduciary prudently determines is expected to have a material effect on the risk of return of an investment

Department of Labor guidance regarding what is “pecuniary” and the extent to which non-pecuniary factors can be considered when selecting investments has changed throughout the years. The proposal was referred to the Senate Committee on Health, Education, Labor, and Pensions.