Private Equity Doesn’t Belong in Your 401(k)

Dear Representative, I am writing in firm opposition to any rule, executive action, or legislation that opens 401(k) plans to private equity investments. This is not financial innovation. It is a rescue operation for an industry running out of institutional buyers, and the rescue is being financed with the retirement savings of ordinary Americans. Private equity is illiquid, opaque, and expensive. Fees routinely run 2 percent of assets plus 20 percent of gains, compared to index funds that charge a tenth of a percent. Returns over the last decade have not consistently beaten public markets once those fees and the leverage risk are accounted for. Valuations are self-reported by the funds themselves, which means a 401(k) participant cannot know what their account is actually worth until they try to sell. That is the opposite of what a retirement account is supposed to provide. The push to access defined contribution plans is not happening because workers are demanding it. It is happening because private equity firms have raised record amounts of capital and cannot find enough pensions, endowments, and sovereign wealth funds to absorb it. Roughly $12 trillion sits in 401(k) accounts. That is the target. Retail savers, who lack the negotiating power, due diligence resources, and legal recourse of institutional investors, are being lined up as the buyer of last resort for assets the smart money no longer wants at current prices. ERISA exists precisely to prevent this. Plan fiduciaries are required to act solely in the interest of participants, and the historical record on alternative assets in retirement plans, from limited partnerships in the 1980s to certain target-date funds loaded with high-fee products, shows what happens when that standard is loosened. Lawsuits, losses, and delayed retirements follow. I ask that you publicly oppose any effort to permit private equity, private credit, or other illiquid alternatives as default or broadly marketed options inside 401(k) plans, and that you support legislation strengthening fee transparency and fiduciary standards for any alternative assets that do enter defined contribution menus. Retirement savings are not a liquidity event for Wall Street. Sincerely, A voting constituent