On December 11th, 2020, the U.S. Department of Labor (DOL) released a final rule on employee benefit plan shareholder rights. This regulatory framework, created for private employee benefit plan fiduciaries, includes information on proxy voting. It also discusses rules for when fiduciaries select and monitor proxy advisory firms. This announcement comes a month after the DOL released a final rule on new requirements for pooled benefit plan providers.

Overview of the Final Rule

Named “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights,” the final rule protects the interests of plan participants and beneficiaries. According to the DOL, the rule achieves this in multiple ways. The employee plan must:

  • confirm that proxy voting and other stakeholder rights are in the interest of providing benefits to participants and beneficiaries. Employers, however, can consider the impact of any costs involved and adjust their plans accordingly;
  • ensure that fiduciaries do not subordinate the interests of participants and beneficiaries in their retirement income or financial benefits. This includes not limiting participants to any non-pecuniary objective, or promote non-pecuniary benefits or goals; and
  • improve any fiduciary practices that relate to the selection and monitoring of proxy advisory firms.

Final Rule Benefits

According to the DOL, by following the final rule, fiduciaries save on costs normally associated with benefit plans. That cost savings and other benefits to plans then flow back to participants and beneficiaries as more secure retirement income. Furthermore, the DOL estimates that incremental costs of complying with these provisions will be small or offset by the cost savings. Cost would also be low because the DOL believes the rule’s requirements are already reflected in many common business practices.


Under the Employee Retirement Income Security Act of 1974 (ERISA), the final rule amends the DOL’s investment duties regulation. The rule also complements the DOL’s recent amendments to the investment duties regulation to protect workers’ retirement savings. That rule confirmed that fiduciaries must select investments solely in accordance with workers’ economic interests considering only pecuniary factors.

The DOL issued the final rule after reviewing 7,000 comments and form letters in response to the original rule proposal. Commenters included a diverse set of stakeholders, including plan sponsors and fiduciaries, individual plan participants, and beneficiaries. All public comments were then posted on the DOL website and at www.regulations.gov

As of the date of this blog post’s publication, the scheduled effective date of this rule is January 15th, 2021. The final rule also includes delayed compliance dates to January 31st, 2022, for certain recordkeeping and proxy voting policy requirements.