U.S. Senator Steve Daines and several Senate colleagues have called on the U.S. Department of Labor to move quickly in implementing a recent executive order from President Trump. The order is intended to allow more American workers and retirees with 401(k) defined-contribution plans to access alternative investment assets.
The letter, addressed to Secretary Lori Chavez-DeRemer, was signed by Senators Markwayne Mullin (R-Okla.), Jim Banks (R-Ind.), Bernie Moreno (R-Ohio), Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.), Katie Britt (R-Ala.), Eric Schmitt (R-Mo.), and Bill Cassidy (R-La.) along with Daines.
“We are thankful for President Trump’s recent executive order directing the Department of Labor to expand Americans’ access to a modern retirement framework by increasing investment choice and diversification. Like the President, we believe this is a critical step in leveling the playing field for the 90 million American workers with a 401(k) or other defined contribution retirement plan who lack the freedom to invest in private equity, cryptocurrency, and other alternative assets…
… As your Department begins working to expeditiously implement the regulatory safe harbor called for in President’s Trump executive order, we urge you to utilize a formal notice and comment rulemaking. Doing so will maximize the order’s effectiveness and ensure industry has the certainty needed to deliver on behalf of American retirees…
… Today, more than eight times as many workers have defined contribution plans than defined-benefit plans, a significant reversal from 1975 when defined-benefit plans outnumbered defined contribution plans. However, whereas defined benefit plans allocate roughly one-third of their $12 trillion in retirement assets to alternative assets, these same assets are unfairly unavailable to those with defined-contribution or 401(k) plans—America’s preferred retirement savings vehicle. This disparate treatment is especially unfair considering the lack of material differences between the average characteristics or risk profiles of workers with a 401(k) versus those with a defined-benefit plan. As the preference for defined-contribution plans has continued to grow, modernizing the regulatory framework and addressing the lack of equal access has become even more essential to enhancing the retirement security of America’s workers,”the senators wrote in the letter.
President Trump’s executive order aims to give more Americans options such as private equity and cryptocurrency within their retirement accounts, which are not currently available for most people with 401(k) or similar plans. The senators noted that while traditional pension funds invest heavily in these types of assets, individuals saving through defined-contribution vehicles do not have comparable access.
The group asked that any regulatory changes include a formal public comment process so industry stakeholders can provide input before new rules take effect.
A full copy of the senators’ letter can be found online.
