Retirement Proxy Protection Act

This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to clarify that when fiduciaries of employee benefit plans manage shareholder rights, such as voting proxies, they must act prudently and solely in the financial interests of plan participants and beneficiaries, and cannot subordinate those interests to non-pecuniary objectives.

Sec. 2, Exercise of shareholder rights: This section adds a new subsection (f) to ERISA section 404. It states that managing plan assets that are shares of stock includes managing shareholder rights like proxy voting. When deciding whether to exercise such a right, a fiduciary must act prudently and solely in the interests of participants and beneficiaries, for the exclusive purpose of providing benefits and defraying reasonable plan expenses. The duty does not require voting every proxy. This subsection does not apply to rights passed through to participants in individual account plans.

Sec. 2, Requirements for exercise: A fiduciary must act solely in accordance with the plan's economic interest, consider costs, evaluate material facts for any vote, and maintain records. The fiduciary shall not subordinate participants' retirement income or financial benefits to any non-pecuniary objective or promote unrelated non-pecuniary benefits.

Sec. 2, Monitoring: A fiduciary must prudently select and monitor any person advising or assisting with shareholder rights, including proxy advisory firms.

Sec. 2, Investment managers and proxy advisory firms: If authority to vote proxies is delegated to an investment manager or proxy advisory firm, the responsible plan fiduciary must prudently monitor their activities to ensure compliance with the requirements.

Sec. 2, Voting policies: A fiduciary may adopt a proxy voting policy, including a safe harbor policy. A safe harbor policy may limit voting resources to proposals substantially related to the issuer's business or expected to materially affect investment value, or establish that the fiduciary will refrain from voting when plan assets in the issuer are below 5% of total plan assets. Such a policy does not preclude voting when the matter is expected to have a material economic effect on investment performance. Compliance with a safe harbor policy is presumed to satisfy fiduciary responsibilities for decisions not to vote.

Sec. 2, Review: A fiduciary must periodically review any policy adopted under this subsection.

Effective date: The amendments apply to exercises of shareholder rights occurring on or after January 1, 2024.