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Published: June 2020

Labor Department should withdraw policy that lets private equity loot retirement plans

Nineteen organizations and individuals that advocate on behalf of consumers, workers, investors and retirees have called on the Department of Labor (DOL) to withdraw its controversial policy statement opening the door to private equity investments in 401(k) plans. These investments are likely to saddle middle-class retirement savers with high costs and lock them into unnecessarily complex investments that underperform publicly available alternatives. The coalition called on DOL to withdraw the policy statement until it can conduct a more careful and balanced analysis of the potential risks and benefits of including a private equity component in retirement plan investments.

The Department of Labor cleared the way for private equity investments to be included within certain diversified funds – including target date funds – made available through workplace retirement plans, such as 401(k) plans. The DOL based its policy on a one-sided consideration of the risks and benefits of private equity investments. Consumer Action joined 18 organizations in criticizing the Department of Labor (DOL) for adopting inadequate investor protections and for being over-reliant on plan sponsors, many of whom lack the financial sophistication necessary to determine whether the funds’ use of private equity is appropriate and represents a good value for plan participants.

 

Lead Organization

Consumer Federation of America

Other Organizations

AFL-CIO | American Economic Liberties Project | American Federation of State, County and Municipal Employees (AFSCME) | Americans for Financial Reform | Education Fund | Better Markets | Center for Popular Democracy | Communications Workers of America (CWA) | Consumer Action | Consumer Federation of America | Economic Policy Institute | Eileen Appelbaum (Co-Director, Center for Economic and Policy Research) | Institute for Agriculture and Trade Policy | National Education Association (NEA) | National Employment Law Project | Private Equity Stakeholder Project | Public Citizen | Revolving Door Project | United Steelworkers (USW) | U.S. PIRG

More Information

For more information, please visit Consumer Federation of America.

Click here to read the letter in full.

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