This bill changes the rules for how retirement plan managers (called fiduciaries) can invest pension money and vote on company shares. Right now, plan managers have some flexibility to consider non-financial factors like environmental or social concerns when making investment decisions. This bill would restrict that flexibility significantly.

For investment decisions, the bill says plan managers must focus almost entirely on financial factors—things like risk and return that directly affect retirement savings. They can only consider non-financial factors (like environmental or social goals) in very limited situations: when two investments are completely identical in financial performance, they can use a random selection method. Even then, they have to document why financial factors alone weren't enough to make a choice. The bill also prevents plan managers from sacrificing investment returns or taking on extra risk just to promote non-financial goals.

For voting on company shares that the plan owns, the bill requires managers to vote only based on what's financially best for the retirement plan and its participants. Managers can adopt policies that limit how many proxy votes they participate in—for example, they might only vote on issues directly related to the company's business or skip voting when the plan owns less than 5% of a company. The bill emphasizes that managers don't have to vote on every proxy; they just need to act prudently when they do vote.

The changes take effect one year after the law passes for investment decisions, and January 1, 2026 for voting on shares. This essentially rolls back recent guidance that allowed retirement plans to consider climate change, social justice, and other non-financial factors as part of their investment strategy.