U.S. Representative Zach Nunn (IA-03) introduced legislation on Monday to protect Iowa retirees’ investment accounts. The Protecting Retirees’ Savings Act will help eliminate conflicts of interest for financial managers that cost Iowans money by lowering investment returns.
“Saving for retirement has gotten harder for Iowans due to rising costs and inflation, which is why it’s more important than ever to do everything in our power to maximize Iowans’ retirement savings,” Rep. Nunn said. “There’s no reason investment managers should be making decisions based on anything other than maximizing returns, and that’s exactly what this bill will help 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. In fact, just two consulting companies are making these decisions on 97% of the shareholder votes nationwide, and corporations and asset managers accept this advice without even reviewing the recommendations 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 votes related to proxy
- 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.
Text of the legislation can be found here.
