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The Scheme to Scramble Your Nest Egg
You shouldn’t have to be a master investor in your spare time to afford a decent retirement. Policymakers have understood this for decades; that’s why the Employee Retirement Income Security Act of 1974 (ERISA) established minimum standards for private-sector retirement plans, requiring employers to clearly communicate plan information and subjecting them to a fiduciary duty, so advisers operate exclusively in the best interest of their beneficiaries.
ERISA recognizes the “enormous asymmetry of power in these markets,” Corey Frayer, director of investor protection at the Consumer Federation of America, told the Prospect. “There is a strict set of laws about employer-sponsored plans in the fiduciary responsibilities related to those plans, and there is government oversight and enforcement on top of that.” As a result, most 401(k) retirement plans feature a default “plain vanilla” option, with a mix of publicly traded stocks and bonds.
But not everyone is happy with this approach, particularly the financiers in the private equity and cryptocurrency industries who want to get their hands on the over $12 trillion stuffed into worker retirement funds. And they may finally have their opportunity with the Trump administration, the culmination of years of pressure.
As the country was distracted by the COVID-19 pandemic in June 2020, the Department of Labor (DOL) released an information letter affirming that plan sponsors could include private equity in certain investment options, so long as they comply with ERISA. It was a direct response to an inquiry from Pantheon Ventures and Partners Group, two of the many private equity firms vying to crack open the defined contribution retirement market.
ERISA recognizes the “enormous asymmetry of power in these markets,” Corey Frayer, director of investor protection at the Consumer Federation of America, told the Prospect. “There is a strict set of laws about employer-sponsored plans in the fiduciary responsibilities related to those plans, and there is government oversight and enforcement on top of that.” As a result, most 401(k) retirement plans feature a default “plain vanilla” option, with a mix of publicly traded stocks and bonds.
But not everyone is happy with this approach, particularly the financiers in the private equity and cryptocurrency industries who want to get their hands on the over $12 trillion stuffed into worker retirement funds. And they may finally have their opportunity with the Trump administration, the culmination of years of pressure.
As the country was distracted by the COVID-19 pandemic in June 2020, the Department of Labor (DOL) released an information letter affirming that plan sponsors could include private equity in certain investment options, so long as they comply with ERISA. It was a direct response to an inquiry from Pantheon Ventures and Partners Group, two of the many private equity firms vying to crack open the defined contribution retirement market.
https://prospect.org/power/2025-06-13-retirement-crisis-401k-private-equity-scrambled/