Jake Johnson is a senior editor and staff writer for Common Dreams.
US President Donald Trump's Labor Department on Monday unveiled a proposal that would welcome private equity and cryptocurrency investments into Americans' 401 plans, the culmination of an aggressive Wall Street lobbying push that could leave the retirement savings of millions vulnerable to the wild swings of so-called 'alternative assets.
'The proposed rule, now subject to a public comment period, was issued at the direction of a Trump executive order from last year that was characterized at the time as 'the holy grail for private equity.'In addition to giving employers a green light to include private equity and crypto investments in 401 plans offered to workers, the new rule would establish a 'safe harbor' allowing retirement account administrators to avoid legal action from employees who believe their funds were steered into excessively risky products.'The legal immunity created by this safe harbor will incentivize financial advisers to pitch these toxic products, which will become ticking time bombs in tens of millions of retirement accounts, which will no doubt result in significant losses,' warned Benjamin Schiffrin, director of securities policy at the advocacy group Better Markets. 'There are good reasons why 401 plans have been considered closed to private markets and cryptocurrencies, and those reasons have not changed. The only thing that has changed is the administration’s support for these industries and regulators’ willingness to do their bidding.' 'This is no reason to endanger the retirement savings of millions of Americans,' Schiffrin added.Oscar Valdés Viera, senior policy analyst at Americans for Financial Reform, similarly warned that 'opening 401s to these products risks turning workers’ retirement savings into a Ponzi-like scheme that throws a lifeline to an industry scrambling for fresh cash.''This isn’t about advancing the interests of retirement savers, it is about opening a new profit center for crypto and Wall Street,' said Viera. 'Retirement savers should not be bailing out these high-risk industries and subsidizing the Wall Street and crypto billionaire class.''Private equity firms should not get a free pass to loot workers’ 401 retirement savings.'Americans currently hold over $10 trillion combined in 401 plans, a huge trove of wealth that the private equity industry has been working for years to access. The Labor Department indicated that its proposed rule would apply to over 720,000 retirement plans covering roughly 118 million workers.The American Prospect reported Tuesday that the managers of private equity firms are 'already pressuring companies, third-party administrators, and the consultants who advise them to list their offerings' among workers' retirement plan options.'One staffer at an institutional investor who is not authorized to speak to the media told the Prospect about their primary worry: that private equity will stick their most overvalued companies into continuation funds exclusively for 401 plan holders, or 'retail investors,' as they are known,' the outlet continued. 'Private credit firms are retailoring their funds for 401 plans as well, and some of the biggest have already struck deals with asset managers like Voya and Vanguard. 'I’d be shocked if the industry doesn’t attempt to dump their garbage onto retail,' the staffer said.'One recent analysis by the Private Equity Stakeholder Project found that private equity funds for retail investors 'dramatically underperformed publicly listed stock indexes' in 2025 while charging much higher fees.Jim Baker, PESP's executive director, said Monday that 'private equity firms should not get a free pass to loot workers’ 401 retirement savings.'“The bar for including private equity in 401s should be extremely high,” said Baker. “Private equity funds have lagged public markets while charging much higher fees, and public pension funds are pulling back from the asset class. Instead, this rule risks shifting more financial risk onto workers who rely on their retirement savings for long-term security.”Sen. Elizabeth Warren also ripped the Labor Department rule, saying in a statement that 'Americans facing an uncertain future in Trump’s economy will now have more reasons to question the security of their retirement savings—all so that Trump’s Wall Street buddies have another pile of cash to play with.''Anyone who cares about the financial security of working people,' said Warren, 'should oppose this proposed rule.'
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