Retirement Proxy Protection Act
The Retirement Proxy Protection Act would amend the Employee Retirement Income Security Act (ERISA) to clarify how fiduciaries must handle shareholder rights, including voting proxies, for plan assets that are stock. The core idea is to require fiduciaries to exercise these rights prudently and only in the economic interests of plan participants and beneficiaries, with the exclusive purpose of providing retirement benefits and covering plan administration costs. The bill lays out specific duties: consider costs, evaluate material facts, and keep records of proxy votes and related activities; monitor advisers and investment managers who help with proxy voting; and, if a proxy voting policy is used, ensure it aligns with serving the plan’s economic interests. It also creates a safe harbor framework that may allow fiduciaries to avoid voting under certain conditions while still meeting fiduciary duties. The changes would apply to exercises of shareholder rights occurring on or after January 1, 2026.
Key Points
- 1Establishes a new ERISA provision (subsection f to Section 404) that governs how fiduciaries exercise shareholder rights, including proxy voting, for plan stock assets. The fiduciary must act prudently and solely in the interests of participants and beneficiaries for the exclusive purpose of providing benefits and paying plan expenses; not all proxies or rights must be exercised.
- 2Requirements for exercising rights: fiduciaries must act in accordance with the plan’s economic interests, consider costs, evaluate material facts, and maintain records of proxy votes and related activities, including efforts to influence management.
- 3Monitoring and accountability: fiduciaries must prudently monitor any advisor, investment manager, or proxy service that assists with exercising shareholder rights to ensure compliance with the duties to act in the plan’s economic interest and for the exclusive purpose.
- 4Proxy voting policies and safe harbors: plans may adopt a proxy voting policy, including a safe harbor that describes when a fiduciary may choose not to vote. Safe harbor options include (i) focusing on proposals substantially related to the issuer’s business or materially affecting value, or (ii) not voting when the issuer’s shares are a small portion of the plan’s or assets under management (below 5% of total assets). Even with a safe harbor, fiduciaries may still vote if a matter is expected to have a material economic impact.
- 5Review and effective date: fiduciaries must periodically review any policy adopted under this new subsection, and the amendments apply to exercises of shareholder rights occurring on or after January 1, 2026.