H.R. 1996 — Retirement Proxy Protection Act

This section amends ERISA Section 404(a) (29 U.S.C. 1104(a)), which sets forth fiduciary duties of prudence and loyalty for private-sector employee benefit plans, by adding subsection (f) to establish specific standards for managing shareholder rights (e.g., proxy voting) appurtenant to plan assets that are shares of stock, applicable to exercises on or after January 1, 2026. The new subsection (1) requires fiduciaries to exercise such rights prudently and solely to further the economic interests of participants and beneficiaries (i.e., providing benefits and defraying reasonable administrative expenses), without subordinating those interests to non-pecuniary objectives; (2) permits but does not require exercising every shareholder right, with an exception for individual account plans that pass through such rights to participants and beneficiaries; (3) mandates fiduciaries, when exercising rights, to consider costs and material facts, maintain records of activities (including attempts to influence management), and prudently select and monitor any delegated advisors, investment managers, or proxy firms; (4) authorizes adoption of proxy voting policies, including safe harbor policies that limit voting to proposals materially affecting the issuer's value or business or refrain from voting if plan holdings in the issuer are below 5% of plan (or managed) assets; and (5) requires periodic review of any such policies. (Thus, the provision prioritizes financial returns over non-economic goals in proxy decisions for plans covering over 150 million participants.)