[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3086 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 3086
To amend the Employee Retirement Income Security Act of 1974 to clarify
the criteria by which a fiduciary may evaluate and select investments
based on nonpecuniary factors, and to clarify the application of
prudence and exclusive purpose duties to the exercise of shareholder
rights.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 30, 2025
Mr. Cassidy (for himself and Mr. Banks) introduced the following bill;
which was read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to clarify
the criteria by which a fiduciary may evaluate and select investments
based on nonpecuniary factors, and to clarify the application of
prudence and exclusive purpose duties to the exercise of shareholder
rights.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Restoring Integrity in Fiduciary
Duty Act''.
SEC. 2. EXERCISE OF FIDUCIARY DUTY IN EVALUATING AND SELECTING
INVESTMENTS.
(a) In General.--Section 404(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(a)), is amended by adding at the
end the following:
``(3) Investments based on pecuniary factors.--
``(A) In general.--For the purposes of paragraph
(1), a fiduciary--
``(i) may evaluate an investment or
investment course of action based only on
pecuniary factors, except as provided in
subparagraph (B);
``(ii) may not subordinate the interests of
the participants and beneficiaries in their
retirement income or financial benefits under
the plan to other objectives;
``(iii) may not sacrifice investment return
or take on additional investment risk to
promote nonpecuniary benefits or goals; and
``(iv) shall weight each pecuniary factor
in a manner that appropriately reflects a
prudent assessment of the impact of the factor
on risk and return.
``(B) Use of nonpecuniary factors for investment
alternatives.--Notwithstanding subparagraph (A), when
choosing between or among investment alternatives, if a
fiduciary is unable to distinguish between or among
investment alternatives or investment courses of action
on the basis of pecuniary factors alone, the fiduciary
shall use the capita aut navia standard as the deciding
factor in the investment decision, provided that--
``(i) the fiduciary documents detail--
``(I) why pecuniary factors were
not sufficient to select the investment
or investment course of action;
``(II) how the selected investment
compares to the alternative investments
with regard to the composition of the
portfolio with regard to
diversification, the liquidity, current
return of the portfolio relative to the
anticipated cash flow requirements of
the plan, and the projected return of
the portfolio relative to the funding
objectives of the plan; and
``(III) how the selected investment
is consistent with the interests of the
participants and beneficiaries in their
retirement income or financial benefits
under the plan; and
``(ii) the fiduciary demonstrates that it
did not expend any resources during the
investment course of action on nonpecuniary
factors that place weight between or among
investment alternatives for the purpose of the
investment decision.
``(C) Investment alternatives for participant-
directed individual account plans.--In selecting or
retaining investment options for a pension plan
described in subsection (c)(1)(A), a fiduciary may
consider, select, or retain an investment option on the
basis that such investment option promotes, seeks, or
supports 1 or more nonpecuniary benefits or goals, only
if--
``(i) the fiduciary satisfies the
requirements of paragraph (1) and subparagraphs
(A) and (B) of this paragraph in selecting or
retaining any such investment option; and
``(ii) such investment option is not added
or retained as, or included as a component of,
a default investment described in subsection
(c)(5) (or any other default investment
alternative).
``(D) Definitions.--For the purposes of this
paragraph:
``(i) Capita aut navia.--The term `capita
aut navia' means a standard by which a
fiduciary chooses at random between or among
investment alternatives where pecuniary factors
are equal and does not give added weight to 1
investment or another, provided that the
investment alternatives have identical risk and
return attributes and choosing among the
investment alternatives would have
comparatively negligible impact, not
considering liquidity constraints or
transaction costs.
``(ii) Investment course of action.--The
term `investment course of action' means any
series or program of investments or actions
related to a fiduciary's performance of the
fiduciary's investment duties, and includes the
selection of an investment fund as a plan
investment, or in the case of a plan described
in subsection (c)(1)(A), a designated
investment alternative under the plan.
``(iii) Material.--The term `material,'
when used to qualify a financial risk or
financial return--
``(I) means a financial risk or
financial return in which there is a
substantial likelihood that a
reasonable investor would attach
importance when--
``(aa) evaluating the
potential financial risks or
returns of an existing or
prospective investment; or
``(bb) exercising, or
declining to exercise, any
rights with respect to
securities; and
``(II) does not include furthering
nonpecuniary, environmental, social,
political, ideological, or other goals
or objectives.
``(iv) Pecuniary factor.--The term
`pecuniary factor' means a factor that a
fiduciary prudently determines is expected to
have a material effect on the risk or return of
an investment based on appropriate investment
horizons consistent with the plan's investment
objectives and the funding policy established
pursuant to section 402(b)(1).''.
(b) Effective Date.--The amendments made by this section shall
apply to actions taken by a fiduciary on or after the date that is 1
year after the date of enactment of this Act.
SEC. 3. EXERCISE OF SHAREHOLDER RIGHTS.
(a) In General.--Section 404 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end
the following new subsection:
``(f) Exercise of Shareholder Rights.--
``(1) Authority to exercise shareholder rights.--
``(A) In general.--The fiduciary duty to manage
plan assets that are shares of stock includes the
management of shareholder rights appurtenant to those
shares, including the right to vote proxies. When
deciding whether to exercise a shareholder right and in
exercising such right, including the voting of proxies,
a fiduciary shall act prudently and solely in the
interests of participants and beneficiaries and for the
exclusive purpose of providing benefits to participants
and beneficiaries and defraying the reasonable expenses
of administering the plan. The fiduciary duty to manage
shareholder rights appurtenant to shares of stock does
not require the voting of every proxy or the exercise
of every shareholder right.
``(B) Exception.--This subsection shall not apply
to voting, tender, and similar rights with respect to
securities that are passed through pursuant to the
terms of an individual account plan to participants and
beneficiaries with accounts holding such securities.
``(2) Requirements for exercise of shareholder rights.--A
fiduciary, when deciding whether to exercise a shareholder
right and when exercising a shareholder right--
``(A) shall--
``(i) act solely in accordance with the
economic interest of the plan and its
participants and beneficiaries;
``(ii) consider any costs involved;
``(iii) evaluate material facts that form
the basis for any particular proxy vote or
exercise of shareholder rights; and
``(iv) maintain a record of any proxy vote,
proxy voting activity, or other exercise of a
shareholder right, including any attempt to
influence management; and
``(B) shall not subordinate the interests of
participants and beneficiaries in their retirement
income or financial benefits under the plan to any
nonpecuniary objective, or promote nonpecuniary
benefits or goals unrelated to those financial
interests of the plan's participants and beneficiaries.
``(3) Monitoring.--A fiduciary shall exercise prudence and
diligence in the selection and monitoring of a person, if any,
selected to advise or otherwise assist with the exercise of
shareholder rights, including by providing research and
analysis, recommendations on exercise of proxy voting or other
shareholder rights, administrative services with respect to
voting proxies, and recordkeeping and reporting services.
``(4) Investment managers and proxy advisory firms.--Where
the authority to vote proxies or exercise other shareholder
rights has been delegated to an investment manager pursuant to
section 403(a), or a proxy voting advisory firm or other person
who performs advisory services as to the voting of proxies or
the exercise of other shareholder rights, a responsible plan
fiduciary shall prudently monitor the proxy voting activities
of such investment manager or advisory firm and determine
whether such activities are in compliance with paragraphs (1)
and (2).
``(5) Voting policies.--
``(A) In general.--In deciding whether to vote a
proxy pursuant to this subsection, the plan fiduciary
may adopt a proxy voting policy, including a safe
harbor proxy voting policy described in subparagraph
(B), providing that the authority to vote a proxy shall
be exercised pursuant to specific parameters designed
to serve the economic interest of the plan.
``(B) Safe harbor voting policy.--With respect to a
decision not to vote a proxy, a fiduciary shall satisfy
the fiduciary responsibilities under this subsection if
such fiduciary adopts and is following a safe harbor
proxy voting policy that--
``(i) limits voting resources to particular
types of proposals that the fiduciary has
prudently determined are substantially related
to the business activities of the issuer or are
expected to have a material effect on the value
of the plan investment; or
``(ii) establishes that the fiduciary will
refrain from voting on proposals or particular
types of proposals when the assets of a plan
invested in the issuer relative to the total
assets of such plan are below 5 percent (or, in
the event such assets are under management,
when the assets under management invested in
the issuer are below 5 percent of the total
assets under management).
``(C) Exception.--No proxy voting policy adopted
pursuant to this paragraph shall preclude a fiduciary
from submitting a proxy vote when the fiduciary
determines that the matter being voted on is expected
to have a material economic effect on the investment
performance of a plan's portfolio (or the investment
performance of assets under management in the case of
an investment manager); provided, however, that in all
cases compliance with a safe harbor voting policy shall
be presumed to satisfy fiduciary responsibilities with
respect to decisions not to vote.
``(6) Review.--A fiduciary shall periodically review any
policy adopted under this subsection.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to an exercise of shareholder rights occurring on or after
January 1, 2026.
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