Protecting Prudent Investment of Retirement Savings Act

Floor Speech

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Mr. WALBERG. Mr. Speaker, pursuant to House Resolution 988, I call up the bill (H.R. 2988) to amend the Employee Retirement Income Security Act of 1974 to specify requirements concerning the consideration of pecuniary and non-pecuniary factors, and for other purposes, and ask for its immediate consideration.

The Clerk read the title of the bill.

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Mr. WALBERG. 2988.

Mr. Speaker, I rise today to speak in support of H.R. 2988, the Protecting Prudent Investment of Retirement Savings Act, introduced by Representative Rick Allen, chairman of the Subcommittee on Health, Employment, Labor, and Pensions.

At its core, this legislation is about one simple principle: Retirement savings should be managed to protect workers' futures and not to advance political agendas.

Over the past several years, the Biden administration pushed a rule that encouraged retirement plan fiduciaries to consider environmental, social, and governance--ESG--factors, when making investment decisions. That might sound harmless, but in practice, it shifts the focus away from what retirement investing is supposed to be about: maximizing returns and minimizing risk for workers and retirees.

Americans set aside money in their 401(k)'s and pension plans to retire with dignity. They do it so that they can pay their bills, cover medical costs, and support their families. They do not invest their hard-earned savings so that Federal bureaucrats can push ideological priorities.

That is exactly the concern here. ESG investing has become a tool for advancing a broader political agenda. Instead of asking: Is this the best investment for the worker, the ESG framework often asks: Does this investment align with certain social or environmental goals?

Those goals are not what ERISA was created to promote. ERISA, the Employee Retirement Income Security Act, was established to ensure that fiduciaries act in the best interests of plan participants. It requires loyalty, prudence, and a clear focus on financial outcomes that workers rely on.

Mr. Speaker, the problem with the Biden-Harris rule is that it created permission and, in many cases, pressure for fiduciaries to prioritize ESG factors over the economic interests of participants. When that happens, retirement security is placed at risk.

ESG funds are often more costly and less transparent. In many cases, they underperform compared to traditional options. That means that workers may be paying more and getting less--less growth, less stability, and less certainty about their future.

This is not a theoretical issue. When a fiduciary chooses investments based on nonfinancial criteria, the person paying the price is not the bureaucrat in Washington or the corporate executive on a conference call. The person paying the price is the worker who depends on that retirement account to survive. That is why H.R. 2988 is needed.

Mr. Speaker, this bill restores the proper purpose of retirement investing: financial security. It makes clear that retirement plan decisions must be made based solely on economic factors--things like risk, return, liquidity, and diversification. It also addresses how fiduciaries use shareholder rights, like proxy voting.

Under current practices, some fiduciaries use the shares held in retirement plans to push political policies through proxy votes, whether or not those policies benefit the workers whose money is at stake.

H.R. 2988 stops that. It makes clear that exercising shareholder rights, including proxy votes, must be done in the economic interests of plan participants, not to advance radical political initiatives, not to appease advocacy groups, and not to satisfy trends in the corporate boardrooms.

In addition, the bill strengthens fairness and nondiscrimination in the selection of service providers. It states clearly that race, color, religion, sex, or national origin may not be considered when selecting fiduciaries, counsel, employees, or service providers for ERISA plans. Retirement plan service providers should be chosen on performance and price, not on ideology or race-based preference.

Finally, Mr. Speaker, H.R. 2988 increases transparency for workers. It includes a notice requirement for defined contribution plans that explains the difference between selecting investments chosen by ERISA fiduciaries and selecting investments through a brokerage window.

Why does that matter? It matters because many workers do not realize that when they move money into a brokerage window, they may be stepping outside the protections provided by plan fiduciaries. This bill ensures workers are informed and can make decisions with clarity. In short, H.R. 2988 is a course correction. It protects retirees from financial experimentation. It protects workers from political interference, and it reinforces the idea that retirement plans exist for one reason: to help Americans retire with stability and security.

H.R. 2988 codifies the principles in the Trump Department of Labor's 2020 rule on retirement plan ESG investing.

Under the bill, as with the 2020 Trump rule, if a fiduciary finds that an ESG factor is a financial factor, then that factor can be considered when investing and exercising shareholder rights.

Nothing in H.R. 2988 prevents a fiduciary from appropriately considering any material risk of an investment. Like the 2020 Trump rule, H.R. 2988 recognizes that ESG factors can present an economic risk or opportunity, which qualified investment professionals would appropriately treat as material economic considerations under generally accepted investment principles.

H.R. 2988 neutrally applies these principles to all investment decisions.

To suggest this bill bars a fiduciary from appropriately considering any factor that may be material to investment is blatantly false. Unlike the Biden-Harris rule, this legislation ensures neutrality and prudent decisionmaking by fiduciaries.

My colleagues on the other side of the aisle have made many claims about the supposed advantages of ESG investing.

Allow me to set the record straight. ESG funds have underperformed for years. According to Morningstar, ESG funds lagged the U.S. Market Index and the S&P 500 in 2023 and 2024. To make matters worse, ESG products charge higher fees to participants than traditional investment funds, which can significantly limit the growth of participants' retirement savings over time.

Finally, according to researchers at George Mason University, ESG funds expose workers and retirees to additional investment risk that traditional investments typically do not face. Increased costs, increased risk, and lackluster returns make for a bad cocktail.

Participants and beneficiaries of employer-sponsored retirement plans rely on the expertise of fiduciaries, who are required by law to act solely in the financial interests of participants. Weakening that expectation to advance partisan ideological objectives is wrong and hurts the safety and stability of Americans.

Finally, Mr. Speaker, in response to my friends on the other side, many Democrats want to make race and sex the most important factors in choosing ERISA retirement plan service providers. In so doing, they are advocating for blatant race and sex discrimination, which we should all strongly oppose.

Discrimination is never justified, and the use of quotas is inherently discriminatory. ERISA plan service providers must be selected using a prudent and nondiscriminatory process. That is what H.R. 2988 requires.

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Mr. WALBERG. Mr. Speaker, we are getting to a point, I think, that the old adage that everything has been said, just not everyone has said it yet. But with fear of offending that specific adage, I must respectfully, again, address the fact of the misconception that is being put forward about the Biden ESG rule as being neutral. That was, is, and always will be patently false.

The Biden-Harris ESG rule was explicitly intended to advance the left's radical climate and social agenda that harms Americans' retirement and long-term financial well-being. Even though the debate can be made about ESG issues, that is not what we want to see taking place for the best benefit of retirees.

This legislation is needed to combat the Biden rule which was issued in response to not one but two executive orders on climate change. The Biden Labor Department expressly stated that the intended effect of the rule is to loosen restrictions on fiduciaries and encourage them to consider ESG factors in their decisionmaking; to encourage them, not simply allow it, but to encourage them.

The Biden Labor Department's explanation of the rule lists ESG factors that it believes are relevant to investment performance, including impacts to climate change, corporate board composition, and workplace diversity and inclusion.

H.R. 2988 is essential to restore the neutrality of financial factor- only evaluation when investing to protect America's retirement savers.

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Mr. WALBERG. Mr. Speaker, I am prepared to close, and I reserve the balance of my time.

Let me close with this: H.R. 2988 is about keeping retirement investing focused on what matters--protecting workers and retirees.

The Biden-Harris ESG rule encouraged fiduciaries to consider political and ideological factors in retirement plans, even when that could increase risk and reduce returns. That is unacceptable.

Representative Rick Allen's bill restores the ERISA standard by requiring that investment decisions be based only on economic factors. It ensures proxy voting and shareholder rights are exercised solely in the financial interest of plan participants, not to push radical policies. It bans discrimination in selecting plan fiduciaries and service providers based on race, religion, sex, or national origin. It almost sounds American in its idea. It improves transparency by requiring plans to explain the difference between fiduciary-selected investments and brokerage windows.

This bill puts retirement savers first, and I urge my colleagues to vote ``yes'' on this bill.

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Mr. WALBERG. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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Mr. WALBERG. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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