WASHINGTON, D.C. — The U.S. House of Representatives today passed U.S. Representative Zach Nunn’s (IA-03) legislation to protect Iowa retirees’ investment accounts. The Protecting Retirees Savings Act was included in a package of bills that passed by a vote of 215 to 203.
“Inflation and rising costs are making it hard enough to save for retirement – that’s why its more important than ever to do everything in our power to maximize Iowans’ retirement savings,” said Rep. Nunn. “Investment managers shouldn’t be making decisions based on anything but maximizing returns. That’s exactly what this bill will help to ensure.”
Under current law, investment managers may make investment decisions based on a company’s policies or political views, rather than maximizing returns for the original investor. Just two firms make recommendations on 97% of shareholder votes nationwide – and often times they make those recommendations based on political motivations. Then, investment managers accept this advice without even reviewing them through a method called robovoting. Often, these two consulting companies have financial or political conflicts of interest that are never disclosed to the original investor. Accounts managed this way see an average of 14% decrease in returns.
The Protecting Retirees Savings Act would eliminate these conflicts of interest for financial managers by:
- Requiring the Securities and Exchange Commission (SEC) to issue final rules prohibiting the use of robovoting with respect to votes related to proxy or consent solicitation
- Prohibiting institutional investors from outsourcing voting decisions with respect to proxy voting
- Removing requirements to vote, so no one would be required to cast votes related to proxy
These steps will help protect Iowans’ retirement investments by ensuring that maximized investment returns, not politics, are driving decisions.
The Protecting Retirees Savings Act was passed as part of the Prioritizing Economic Growth Over Woke Policies Act. The bill now awaits consideration in the Senate. Text of the bill can be found here.
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