Key Takeaways
- • The Center for Economic and Policy Research (CEPR) argues private equity should be excluded from workers' IRAs and 401(k)s, citing weak pension performance relative to a simple 60/40 portfolio.
- • PitchBook's Pension Fund Tracker reports the 50 largest U.S. public pension funds returned an average 7.4% over the 10 years ending June 30, 2024, versus 8.1% for a 60% stock/40% bond portfolio.
- • CalPERS, the largest U.S. pension with $502.9 billion in AUM, returned 6.2% over the same 10-year period.
- • Private equity fundraising hit a seven-year low in Q1 2025, $22 billion below the same period a year earlier.
- • Retirement accounts holding an estimated $12 trillion are the new target for PE firms as Trump 2.0 regulators are expected to loosen restrictions.
Summary
The Center for Economic and Policy Research (CEPR) warns that private equity firms are seeking access to American workers' retirement savings, which it estimates at roughly $12 trillion across IRAs and 401(k) accounts. According to the article, the Department of Labor under the first Trump administration approved including private equity in these accounts under certain circumstances, but uptake was disappointing. The industry now expects greater latitude under the second Trump administration, and is developing exchange-traded funds that would hold private assets, with optimism about approval for retirement plan inclusion.
The article links this push to fundraising strain. Per the piece, private equity fundraising fell to a seven-year low in the first quarter of 2025, $22 billion below the comparable prior-year period. CEPR states that PE investors have faced three years of reduced payouts, with distributions in 2024 returning only about half the typical value of investments sold, a shortfall it characterizes as roughly $400 billion below investor expectations.
Industry arguments for inclusion center on diversification, access to thousands of portfolio companies, and higher return potential. CEPR counters with performance data from PitchBook's Pension Fund Tracker, which shows the 50 largest U.S. public pensions returned an average 7.4% annually over the decade ending June 30, 2024. A conventional 60% stock/40% bond portfolio returned 8.1% over the same period. CalPERS, with $502.9 billion in assets, returned 6.2% over the 10 years ending June 30, 2024. The article also cites a similar analysis of the 50 largest university endowments, which it says were heavily invested in private assets and similarly trailed the simple benchmark.
CEPR concludes that private equity increases risk without improving returns for savers, and therefore does not belong in workers' retirement accounts. The article presents this as an advocacy position, and the performance comparisons reflect the author's selection of benchmarks and time windows.
The article links this push to fundraising strain. Per the piece, private equity fundraising fell to a seven-year low in the first quarter of 2025, $22 billion below the comparable prior-year period. CEPR states that PE investors have faced three years of reduced payouts, with distributions in 2024 returning only about half the typical value of investments sold, a shortfall it characterizes as roughly $400 billion below investor expectations.
Industry arguments for inclusion center on diversification, access to thousands of portfolio companies, and higher return potential. CEPR counters with performance data from PitchBook's Pension Fund Tracker, which shows the 50 largest U.S. public pensions returned an average 7.4% annually over the decade ending June 30, 2024. A conventional 60% stock/40% bond portfolio returned 8.1% over the same period. CalPERS, with $502.9 billion in assets, returned 6.2% over the 10 years ending June 30, 2024. The article also cites a similar analysis of the 50 largest university endowments, which it says were heavily invested in private assets and similarly trailed the simple benchmark.
CEPR concludes that private equity increases risk without improving returns for savers, and therefore does not belong in workers' retirement accounts. The article presents this as an advocacy position, and the performance comparisons reflect the author's selection of benchmarks and time windows.
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