Blade Editorial: Retirement investment mistake

President Trump will one day be remembered as an accomplice to fraud if he signs an executive order directing the Securities and Exchange Commission and the Labor Department to give employers “guidance” on including private assets in their 401(k) plans.

The billionaires behind giant firms like Blackrock, Blackstone, Apollo, and many others have been working Washington for access to the $12.4 trillion in these private sector retirement savings accounts. The Wall Street Journal reports Trump will go along.

For private equity funds and the public pensions like Ohio’s that provide the majority of their investment capital, getting retirement account money solves a brewing crisis. The pension backed private equity funds own 29,000 businesses they can’t sell except at a big loss.

The pensions like State Teachers Retirement System or the Ohio Public Employee Retirement System need money from those private equity funds to pay their benefits. Liquidating the investments and locking in the loss would document the foolishness of paying exorbitant fees to fund managers for investments that are blind to the pension fund fiduciaries.

Turning to private equity to bail out the stressed public pensions is a short-term solution that will short-change the 401(k) investors when they need their retirement money in a couple of decades and find out that they’ve been duped. The annual private equity fees and profit shares on valuations provided by fund managers will keep coming in the meantime.

Current clients of private equity firms have cut way back on new investments because so much of the money they’re already provided has missed the deadline for return and is way below reported value.

Without new money coming in to buy the old investments from each other as has been the key to keeping the appearance of investment success alive, there will be a crisis for both private equity firms and public pensions.

But the fact that private equity can’t raise much capital with the clients they serve now should cause the Trump Administration to protect the 401(k) accounts of American workers from such an inappropriate investment.

Workers saving for retirement in a 401(k) need to know there is good reason private equity has been off limits in their plans and they should avoid any investment anywhere that is not fully transparent on all investment holdings and management expenses.

The Employee Retirement Income Security Act or ERISA was passed in 1974 specifically to require full transparency of corporate retirement holdings in the private sector and to hold the investment standards to a fiduciary requirement enforceable by federal law.

This why state pensions, protected by sovereign immunity from transparency and suitability requirements for their investments, are the retirement funds with private equity in their portfolio.

Donald Trump is wrong to obliterate a half century of effective retirement protection.

First Published July 27, 2025

Read online at https://www.toledoblade.com/opinion/editorials/2025/07/28/editorial-retirement-investment-mistake/stories/20250725003

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law enacted to protect the retirement benefits and welfare plans of workers in the private sector. However, it's crucial to understand that ERISA generally does not cover public pensions (those for governmental employees at the federal, state, and local levels).