Retirement Savings Modernization Act Introduced

Senators Tim Scott (R-SC), and Pat Toomey (R-PA), along with Representative Peter Meijer (R-MI), have introduced the Retirement Savings Modernization Act in the Senate and House respectively. According to a press release, the legislation would enhance retirement savings through access to a wide range of alternative assets and reflect the demands of the modern workforce. The proposal would amend Section 404(a) of ERISA to provide that a fiduciary shall not be liable for a breach of duty solely for recommending, selecting, or monitoring any ‘covered investment’ option for a plan. A list of covered investments is defined as, but is not limited to the following

  • Commodities
  • Debt, including public and private credit
  • Digital assets
  • Hedge funds
  • Infrastructure
  • Insured products and annuities
  • Private equity
  • Real assets
  • Real estate or real estate-related securities
  • Securities listed on a national securities exchange
  • Venture capital

An investment in any fund, comingled account, or pooled investment vehicle that invests in any investment, including but not limited to an investment described above

The press release acknowledges a Georgetown study that found that modest diversification to alternative asset classes would increase savings and reduce losses in a downturn. The release further concludes that plan fiduciaries must still select investments through a prudent process, and the bill explicitly does not create a safe harbor from a fiduciary’s legal duties.

The proposal appears to be in part a response to Department of Labor guidance issued and announced in March.