November 6, 2026 | Commonsense401kProject

Jay Rogers has written one of the most important public pension reform arguments of 2026.

His November 3 article, Public Pension Trustees Answer to No Federal Standard. Congress Can Fix That, exposes a fundamental injustice in American retirement law: More than 37 million state and local public pension participants are excluded from the federal fiduciary protections of the Employee Retirement Income Security Act of 1974 (ERISA).

Read Jay Rogers’ excellent article

I strongly agree with Rogers. In fact, I believe Congress should go even further by providing public pension participants not only with ERISA’s fiduciary standards but also with stronger transparency requirements, enforceable conflict-of-interest protections, and meaningful access to federal courts.

The retirement savings of teachers, firefighters, police officers, and other public employees deserve at least the same legal protections as those of corporate employees.

The 1974 Loophole That Congress Never Fixed

ERISA imposes demanding fiduciary obligations on private retirement plans.

Under ERISA Section 404, fiduciaries must act solely in the interests of participants and beneficiaries, exercise prudence, and use plan assets for the exclusive purpose of providing benefits and paying reasonable administrative expenses.

ERISA also establishes prohibited-transaction rules governing conflicts of interest and provides mechanisms for participants to seek judicial relief.

But Section 4(b)(1) excludes governmental plans.

The result is an extraordinary inconsistency.

A fiduciary managing retirement assets for a private corporation faces federal fiduciary requirements. A trustee managing billions for a public pension system may be governed by very different state laws and enforcement arrangements.

Some states have strong fiduciary statutes and constitutional protections. Others provide substantially weaker practical accountability.

Why should the quality of a teacher’s pension protection depend on which state employs that teacher?

Rogers is right that this makes little sense.

The CalPERS and Ohio STRS Experience Demonstrates the Need

My work investigating public pension governance, including CalPERS and the State Teachers Retirement System of Ohio, has repeatedly exposed problems that deserve independent scrutiny.

These include:

• Excessive and inadequately explained investment management fees.
• Conflicts involving private equity managers, consultants, and pension executives.
• Questionable compensation and incentive arrangements.
• Opaque private market valuations and performance reporting.
• Resistance to public records requests.
• Weak independent oversight of investment decisions.

Consider CalPERS, which manages hundreds of billions of dollars in retirement assets.

The question should not simply be whether CalPERS complied with California law or whether a particular investment decision received board approval.

It should also be whether fiduciaries acted prudently, loyally, and exclusively in the interests of participants and beneficiaries under an enforceable national standard.

Similarly, Ohio STRS has faced serious questions over investment performance reporting, executive compensation, and oversight.

These are precisely the types of matters where participants should have effective legal remedies rather than having to depend entirely on the willingness of state officials to investigate their own pension systems.

Federal fiduciary protection would not automatically establish that any particular pension investment, fee, or compensation decision violated the law. It would, however, provide an additional framework for evaluating conduct and holding fiduciaries accountable.

Private Equity Makes Federal Protection More Urgent

The retirement industry has changed dramatically since Congress enacted ERISA in 1974.

Public pension plans have become major investors in private equity, private credit, real estate, infrastructure, and other opaque alternative investments.

These arrangements can involve layers of management fees, carried interest, related-party transactions, valuation discretion, and complex investment structures.

Participants frequently cannot determine the full economic cost of these investments.

Even trustees may receive incomplete information.

A national fiduciary standard should be accompanied by disclosure requirements for:

1. All investment fees, including carried interest and underlying fund expenses.
2. Related-party transactions and financial conflicts.
3. Private investment valuations and valuation methodologies.
4. Investment consultant compensation and business relationships.
5. Performance calculated using consistent, independently verifiable methodologies.

ERISA alone does not currently mandate every one of these disclosures. Congress should establish them expressly for public pensions.

A public pension system should not be able to hide critical financial information behind private equity confidentiality agreements.

Pension Assets Are Not Political Slush Funds

One of Rogers’ strongest arguments is that pension assets should not be treated as instruments of government policy.

He identifies examples from states controlled by both political parties.

The principle should be straightforward: Retirement assets belong in trusts managed for participants and beneficiaries, not for the political priorities of governors, legislators, or investment managers.

That does not mean every investment involving environmental, labor, governance, or other public-policy considerations is necessarily imprudent.

A fiduciary may properly consider any factor that materially affects financial risk or expected return.

But fiduciaries should be required to demonstrate that investment decisions are financially justified and consistent with their duties of loyalty and prudence.

The same standard should apply whether political pressure comes from the right or the left.

A Federal Right to Sue Is Essential

Rogers correctly emphasizes that legal standards mean little without enforcement.

I would make the right of participants to seek judicial relief a central feature of the legislation.

Congress should authorize participants and beneficiaries to bring federal fiduciary claims, subject to appropriate procedural requirements, and permit recovery for losses to the plan caused by fiduciary breaches.

This legislation must also address a problem highlighted by the Supreme Court’s decision in Thole v. U.S. Bank.

Participants in defined-benefit plans may face significant standing barriers when their promised benefits are not directly affected by alleged investment misconduct.

Congress should establish express statutory causes of action and appropriate remedies, while recognizing that Article III constitutional standing requirements cannot simply be eliminated by statute.

Public employees should not have to wait until their pension checks are reduced before they can seek accountability for serious misconduct.

Federal Oversight Without Federal Takeover

The most attractive feature of Rogers’ proposal is its simplicity.

Congress need not dictate pension benefit formulas, retirement ages, employer contribution rates, or investment allocations.

States can continue to operate their pension systems.

What Congress should establish is a national fiduciary floor.

Public pension trustees should owe enforceable duties of loyalty and prudence, disclose conflicts and investment expenses, and face meaningful consequences for violations.

Federal standards should supplement, rather than weaken, stronger state protections.

The Department of Labor should have enforcement authority, while state attorneys general should retain appropriate roles.

Congress must carefully address sovereign immunity, constitutional limitations, and the relationship between federal and state law to ensure the legislation works in practice.

Congress Should Act Now

Rogers reminds us that Congress recognized the public pension oversight problem decades ago.

The issue has been studied, debated, and repeatedly postponed.

Meanwhile, public pension systems have become enormously more complex, with growing exposure to opaque private investments and sophisticated Wall Street financial structures.

I propose that Congress enact a Public Pension ERISA Fiduciary Protection Act.

The legislation should extend core ERISA fiduciary and prohibited-transaction standards to state and local retirement plans, require meaningful public disclosures, and create enforceable remedies.

I have included a simplified congressional discussion draft below.

Jay Rogers deserves considerable credit for putting this issue back on the national agenda.

Congress should finally answer the question left unresolved in 1974: Why should a public employee’s retirement savings receive less federal fiduciary protection than a private employee’s?

There is no persuasive reason for that inequality to continue.

It is time to close the loophole.

Part II — Proposed Federal Legislation

The bill below deliberately takes a simpler approach than your broader public pension transparency legislation. It establishes the legal foundation first: fiduciary duty, prohibited transactions, disclosure, and enforcement.

Public Pension ERISA Fiduciary Protection Act of 2026

Congressional Discussion Draft — November 6, 2026

A BILL

To extend federal fiduciary standards, conflict-of-interest protections, transparency requirements, and enforcement remedies to state and local governmental retirement plans, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled:

SECTION 1. SHORT TITLE.

This Act may be cited as the “Public Pension ERISA Fiduciary Protection Act of 2026.”

SECTION 2. PURPOSE.

The purposes of this Act are:

(a) To establish minimum federal fiduciary protections for participants and beneficiaries of state and local governmental retirement plans.

(b) To require pension fiduciaries to act solely in the interests of participants and beneficiaries.

(c) To prohibit self-dealing, undisclosed conflicts of interest, and imprudent management of retirement assets.

(d) To establish minimum transparency and reporting requirements.

(e) To provide effective federal enforcement and judicial remedies.

(f) To preserve state authority over pension benefit structures, funding decisions, and administration, subject to these minimum federal protections.

SECTION 3. APPLICATION OF ERISA FIDUCIARY STANDARDS.

(a) Notwithstanding Section 4(b)(1) of the Employee Retirement Income Security Act of 1974, state and local governmental retirement plans shall be subject to the fiduciary responsibility provisions of Part 4 of Subtitle B of Title I of ERISA, as specifically made applicable by this Act.

(b) Such provisions shall include:

1. Section 403 — Protection and exclusive use of plan assets.
2. Section 404 — Fiduciary duties of loyalty, prudence, and diversification.
3. Section 405 — Liability for breaches by co-fiduciaries.
4. Section 406 — Prohibited transactions.
5. Section 408 — Statutory and administrative exemptions, subject to applicable conditions.
6. Section 409 — Personal liability for fiduciary breaches.

(c) A fiduciary shall act solely in the interests of participants and beneficiaries and shall not subordinate their retirement interests to unrelated political, personal, or commercial objectives.

(d) This Act shall apply to state and local defined-benefit and defined-contribution retirement plans, including public pension trusts and governmental 401(a), 403(b), and 457(b) retirement arrangements to the extent designated by implementing regulations.

SECTION 4. CONFLICTS OF INTEREST AND PROHIBITED TRANSACTIONS.

(a) The prohibited-transaction standards of ERISA Section 406 shall apply to covered governmental retirement plans.

(b) Fiduciaries shall disclose material financial relationships involving investment managers, consultants, custodians, service providers, and related parties.

(c) No fiduciary may receive undisclosed compensation or personal financial benefits arising from plan investments or contracts.

(d) Transactions with parties in interest shall be prohibited unless authorized by an applicable statutory or administrative exemption and all exemption conditions are satisfied.

SECTION 5. TRANSPARENCY AND PUBLIC REPORTING.

(a) Each covered retirement plan shall publish an annual report containing:

1. Total assets, liabilities, and funded status, where applicable.
2. Investment performance and applicable benchmarks.
3. Direct and indirect investment fees and expenses.
4. Private equity, private credit, real estate, and other alternative investment exposures.
5. Material related-party transactions and conflicts of interest.
6. Compensation paid to senior investment personnel and outside investment consultants.
7. The plan’s investment policy statement.
8. Proxy-voting policies and material voting records.

(b) Reports shall be publicly accessible without charge.

(c) The Secretary of Labor shall establish standardized reporting requirements, including reasonable treatment of confidential personal information and genuinely proprietary information, without permitting confidentiality agreements to conceal material investment fees, valuations, or conflicts.

SECTION 6. ENFORCEMENT AND CIVIL REMEDIES.

(a) The Secretary of Labor shall have authority to investigate violations of this Act and seek appropriate civil remedies.

(b) State attorneys general may bring civil enforcement actions to protect covered retirement plans and their participants and beneficiaries.

(c) Participants and beneficiaries shall have a statutory cause of action, subject to applicable constitutional standing requirements, to seek appropriate relief for fiduciary breaches.

(d) Available remedies may include:

1. Restoration of losses to the retirement plan.
2. Disgorgement of improper fiduciary profits.
3. Injunctive and other equitable relief.
4. Removal of fiduciaries for serious violations.
5. Reasonable attorney’s fees and litigation costs as determined by the court.

(e) Congress authorizes the Secretary of Labor to pursue plan-wide remedies where individual participants lack standing to bring a federal action.

(f) Nothing in this Act shall be construed to eliminate the constitutional requirements of Article III or to abrogate state sovereign immunity beyond the extent expressly authorized by Congress and permitted by the Constitution.

SECTION 7. PRESERVATION OF STATE PENSION AUTHORITY.

(a) Nothing in this Act shall require states or local governments to:

1. Change retirement ages or benefit formulas.
2. Adopt federal pension funding formulas.
3. Transfer pension assets to the federal government.
4. Terminate existing pension systems.
5. Obtain insurance from the Pension Benefit Guaranty Corporation.

(b) State laws providing stronger fiduciary, transparency, or participant protections shall remain enforceable.

(c) Federal fiduciary standards established by this Act shall constitute minimum protections and shall not diminish benefits or contractual rights otherwise protected by law.

SECTION 8. IMPLEMENTATION AND TAX QUALIFICATION.

(a) The Secretary of Labor and Secretary of the Treasury shall jointly establish implementing regulations within 18 months after enactment.

(b) Congress intends compliance with the fiduciary standards of this Act to be a condition of continued favorable federal tax treatment for covered governmental retirement arrangements, to the extent specified in conforming amendments to the Internal Revenue Code.

(c) Enforcement shall prioritize correction of violations, restitution, and fiduciary accountability rather than penalties that unnecessarily reduce participant benefits.

(d) The Secretaries shall establish a correction program for governmental plans, including reasonable transition relief.

(e) The Secretaries shall report to Congress on constitutional, sovereign-immunity, and implementation issues before the effective date.

SECTION 9. EFFECTIVE DATE.

(a) This Act shall take effect 24 months after enactment.

(b) The Secretary of Labor may provide reasonable transitional relief for existing investment contracts and reporting systems.

(c) This Act shall apply prospectively and shall not retroactively impose liability for conduct completed before its effective date.

END OF DISCUSSION DRAFT

Legislative counsel should prepare conforming amendments to ERISA, the Internal Revenue Code, and applicable jurisdictional and enforcement provisions before introduction.

By Christopher B. Tobe | Commonsense401kProject | November 5, 2026

Elon Musk is getting much of the attention as one of the biggest political losers in Texas’s November 3 elections. But another billionaire financial empire deserves scrutiny: Apollo Global Management and its insurance subsidiary, Athene.

On August 3, 2026, Apollo CEO Marc Rowan announced that Austin, Texas, would become a major new strategic hub for Apollo and Athene.

Texas Governor Greg Abbott enthusiastically welcomed the announcement, proclaiming Texas the new financial capital of America.

Exactly three months later, Texas voters rejected Abbott and elected Democrat Gina Hinojosa governor. Democrats also won the lieutenant governorship, attorney general’s office, and comptroller’s office.

For Apollo, the timing could hardly be more interesting.

The firm had just selected Texas as an important center for expanding its investment management, private-credit, financial-market, and retirement insurance businesses. It praised the state’s favorable business environment.

Now the politicians responsible for that environment are being replaced.

The question is whether Texas will continue competing to attract Wall Street firms by offering favorable conditions—or start demanding something more valuable: transparency, accountability, and genuine protection for retirees and taxpayers.

Apollo’s August Announcement: More Than Another Corporate Office

Apollo’s August 3 announcement was not simply about relocating employees from expensive New York offices to cheaper Texas real estate.

It was about building the next generation of Apollo and Athene.

The company described an Austin operation that would develop new investment products, distribution systems, infrastructure, market-making capabilities, and retirement solutions.

Apollo selected two important executives to lead the expansion:

• Eric Needleman, Apollo’s head of capital solutions.
• Mike Downing, a senior Athene executive.

Bloomberg reported that the new operation would include substantial market-making functions and business lines supporting Apollo and Athene.

This matters because Apollo is not merely another private-equity firm.

Through Athene, it operates one of the world’s largest retirement insurance businesses. Athene reported more than $470 billion in total assets as of June 30, 2026.

Apollo manages investments, including private credit. Athene sells retirement products and assumes long-term insurance obligations. Together, they form an enormously powerful financial structure connecting insurance liabilities to Apollo’s investment-management business.

In its official announcement, Rowan praised Austin’s talent, technology, and business environment.

Abbott celebrated Apollo’s decision as further evidence of Texas’s attractiveness to financial institutions.

What neither announcement adequately addressed was the question that should concern every pension trustee, insurance regulator, and retiree:

What happens when an increasingly complex financial empire combines private-credit investments, insurance guarantees, affiliated transactions, and long-term retirement obligations?

Why Did Apollo Choose Texas?

Texas has spent years advertising itself as an alternative to New York, California, and Delaware.

Its attractions include no individual state income tax, a relatively favorable business climate, expanding corporate-law infrastructure, and political leadership eager to recruit financial institutions.

The state has also become a major center for data centers, artificial intelligence infrastructure, energy development, semiconductor manufacturing, and other capital-intensive businesses.

These industries need enormous amounts of financing.

Apollo wants to provide that financing.

The combination is commercially attractive: Apollo can arrange and manage loans and other investments, while Athene’s retirement business provides a source of long-duration capital that can be invested subject to applicable insurance requirements.

But the advantages of this arrangement for Apollo’s shareholders and investment managers are not necessarily identical to the interests of annuity holders.

There is an important distinction here. Apollo has not established that its decision to expand in Texas involved relocating Athene’s insurance-company domicile or escaping an existing regulator. Athene maintains substantial insurance operations regulated through Iowa and Bermuda, among other jurisdictions.

Nevertheless, the Austin expansion raises a legitimate question about whether Texas’s broader regulatory philosophy influenced Apollo’s choice.

Did Apollo choose Texas merely for talent and taxes, or did it also expect a political and regulatory environment sympathetic to increasingly complex financial products?

Apollo should be asked directly.

The Apollo-Athene Machine: Private Credit Meets Retirement Savings

The relationship between Apollo and Athene illustrates one of the most important structural developments in American retirement finance.

Traditional insurance companies collect premiums, invest the proceeds, and promise future payments.

Apollo and Athene have expanded that model by integrating a major alternative asset manager with a major retirement insurer.

The arrangement creates several potential conflicts that deserve much closer examination.

First, affiliated investment management.

When an insurance company uses an affiliated investment manager, regulators and policyholders need to know how fees are determined, how investments are selected, and whether affiliated transactions are conducted on fair terms.

Second, private-credit valuations.

Private loans and other illiquid assets generally lack the continuous market pricing available for publicly traded bonds.

Their reported values can depend heavily on models, assumptions, and appraisals.

This creates opportunities for valuation smoothing and potentially delayed recognition of losses.

Third, liquidity mismatches.

Annuity liabilities can extend for decades. Private-credit assets may also be long-term and illiquid, but their cash flows, credit risks, and liquidity characteristics do not necessarily match the insurer’s obligations.

Fourth, offshore reinsurance and regulatory arbitrage.

Complex insurance groups may use offshore reinsurers and affiliated entities to allocate liabilities and capital across jurisdictions.

Such structures are not inherently improper. But they deserve consolidated supervision, transparent disclosures, and credible stress testing.

Fifth, the concentration of retirement risk.

A pension plan transferring billions of dollars in liabilities to one insurer is replacing a diversified pension investment portfolio and federal pension insurance protections with a long-term contractual obligation dependent on the insurer’s financial strength and applicable state guaranty arrangements.

The relevant question is not whether Athene currently satisfies regulatory capital requirements.

It is whether those requirements, together with existing disclosure and supervisory practices, adequately capture the risks of an increasingly interconnected private-credit and insurance system.

What the Wharton Research and the 2008 Financial Crisis Tell Us

In my October 20 article, Wharton Exposes the Private Equity Insurance Risk Machine—and Why the Entire Annuity Industry May Be Forced to Follow, I examined research raising concerns about the changing investment practices of life insurers.

The problem is not confined to private-equity-controlled insurance companies.

As insurers pursue higher investment returns, competitors may face pressure to increase allocations to private credit, structured investments, and other less-liquid assets.

That can transform a firm-specific investment strategy into an industry-wide financial stability concern.

The 2008 experience of AIG should remain a warning.

AIG’s near-collapse demonstrated how quickly confidence in a highly rated financial institution can deteriorate when complex obligations, collateral demands, and liquidity pressures converge.

Athene’s business model is not identical to AIG’s pre-crisis financial-products business, and the two should not be treated as interchangeable.

But the broader lesson is unmistakable:

An insurance guarantee is only as reliable as the insurer’s capacity to honor it under severe financial stress.

A high credit rating, favorable accounting presentation, or reassuring statement from management is not a substitute for transparent risk analysis.

Texas’s Insurance Regulators Should Be Asking Tougher Questions

Texas has actively competed to attract insurance companies.

That strategy may create jobs and economic activity, but it also raises questions about regulatory capacity.

The Texas Department of Insurance has acknowledged growing demands associated with its expanding domestic insurance industry.

If increasingly complex insurers, reinsurers, and financial groups are operating in or entering Texas, the state must ensure that examination staffing, actuarial expertise, investment oversight, and enforcement resources keep pace.

For Apollo and Athene, the most important regulatory questions involve their actual insurance entities and transactions, including those supervised outside Texas.

A Texas governor or attorney general cannot simply rewrite Iowa insurance law or Bermuda reinsurance requirements.

But Texas officials can examine transactions within their jurisdiction, strengthen oversight of Texas-regulated insurers, investigate potential violations of applicable law, and advocate for broader reforms through national regulatory organizations.

They can also demand much greater transparency when public pension money is entrusted to alternative asset managers.

That is where the election may become particularly consequential.

Texas Public Pension Funds: Follow the Money

Texas controls or oversees an enormous ecosystem of public retirement assets.

Major systems include the Teacher Retirement System of Texas, Employees Retirement System of Texas, Texas Municipal Retirement System, and Texas County & District Retirement System.

These systems invest substantial sums through private-market managers.

The public deserves to know the precise extent of their relationships with Apollo, Athene, and affiliated investment vehicles.

A comprehensive investigation should disclose:

1. Every Apollo-managed private-equity, private-credit, real-estate, infrastructure, and insurance-linked investment held by major Texas pension systems.
2. Total capital commitments, invested amounts, distributions, and remaining unfunded commitments.
3. Management fees, performance fees, carried interest, transaction charges, and expenses paid directly or indirectly to Apollo and related parties.
4. Valuation methodologies, including the frequency of independent valuations and any secondary-market transactions that reveal discounts to reported net asset values.
5. Placement-agent arrangements, pension consultant relationships, political contributions, and potential conflicts of interest.
6. Whether Apollo or Athene has financed major Texas infrastructure or data-center projects in which public pension funds are investors, directly or indirectly.

These are investigative priorities, not allegations that every such relationship exists or that particular transactions were improper.

Texas pension trustees have a duty to act in beneficiaries’ interests.

They should not be permitted to hide behind claims of trade secrecy when billions of dollars of public retirement money are at stake.

The Epstein and Leon Black Questions Have Not Disappeared

Apollo’s history adds another reason why independent scrutiny matters.

Apollo co-founder Leon Black’s financial relationship with Jeffrey Epstein paying him $148mm for tax advice has became a major corporate governance controversy.

Apollo commissioned a review of those payments, and Black subsequently left his leadership positions.

The existence of that relationship does not establish wrongdoing by every Apollo executive or by Athene. Nor does it establish that current Texas pension investments are connected to Epstein.

But the episode demonstrates why private financial relationships, governance arrangements, and conflicts of interest must be examined rather than accepted on management’s assurances.

In my earlier investigation, CalPERS’ Sick, Twisted Relationship with Jeffrey Epstein-Linked Apollo Private Equity, I questioned whether California’s public pension system had sufficiently addressed the implications of its relationship with Apollo.

The broader concern is whether public pension boards have the independence and determination to challenge powerful financial managers when uncomfortable facts emerge.

Texas should not repeat California’s mistakes and consider divestiture.

Governor Hinojosa and Attorney General Johnson Have an Opportunity

The election of Gina Hinojosa as governor, Nathan Johnson as attorney general, and Sarah Eckhardt as comptroller creates an opportunity for a different approach to financial accountability.

The new leadership should not assume that every policy associated with Abbott was improper.

Nor should it automatically treat every financial institution that expanded into Texas as suspect.

Instead, it should establish an evidence-based review of whether Texas’s economic-development and financial-regulatory policies have adequately protected the public.

Governor Hinojosa should direct an independent review of the state’s insurance regulatory capacity, appointments, economic-development incentives, and relationships with major financial institutions.

Attorney General Johnson should examine potential violations of Texas law involving public contracting, consumer protection, conflicts of interest, and financial representations, using the office’s lawful investigative and enforcement authority.

Comptroller Eckhardt should examine relevant state expenditures, economic-development incentives, and transparency requirements within the comptroller’s statutory jurisdiction.

The legislature should strengthen public pension disclosure laws, including requirements for underlying private-market holdings, valuation methodologies, fees, affiliated transactions, and political spending disclosures.

Independent pension boards would retain their legal investment authority, but secrecy should not be confused with fiduciary independence.

Seven Reforms Texas Should Pursue

1. Full private-market investment transparency. Public pension systems should disclose underlying investments, fees, valuation methods, and material conflicts, with carefully limited protections for genuinely sensitive information.

2. Independent private-credit valuation reviews. Large private-market investments should undergo independent valuation testing, including comparisons with actual secondary-market transactions.

3. Insurance-company stress testing. Regulators should examine how major credit losses, liquidity shocks, rating downgrades, and reinsurance counterparty failures could affect annuity obligations.

4. Transparency for affiliated transactions. Insurers should disclose material related-party investment management fees, financing arrangements, reinsurance transactions, and potential conflicts.

5. Stronger protections for pension risk transfers. Contracts should incorporate meaningful downgrade protections, enhanced disclosure, and enforceable remedies where legally and commercially feasible.

6. Political spending and placement-agent disclosure. Investment managers seeking public pension business should disclose relevant direct political contributions, intermediaries, and legally reportable indirect political spending. Legislators should examine additional disclosure requirements that can survive constitutional scrutiny.

7. Federal life insurance oversight. Texas should support stronger federal transparency and systemic-risk oversight of major life insurance groups while preserving appropriate state regulatory responsibilities.

These proposals would not prevent Apollo, Athene, or any other financial institution from operating in Texas.

They would require firms benefiting from access to retirement savings and public pension assets to meet higher standards of accountability.

The Real Question: Who Benefits from Texas Becoming a Financial Capital?

Apollo’s Texas expansion may prove economically successful.

It may generate well-paid jobs, attract investment, and strengthen the state’s financial-services sector.

None of those outcomes should be dismissed.

But the benefits to Texas taxpayers, pension participants, and insurance policyholders must be evaluated separately from the benefits to Apollo’s executives and shareholders.

There is nothing inherently wrong with a financial firm choosing a state with favorable taxes and an attractive business environment.

There is something profoundly wrong if regulatory competition becomes a race to provide the least scrutiny of complex financial risks.

Texas should compete on the quality of its workforce, infrastructure, universities, and economic opportunities.

It should not compete by weakening protections for retirees.

Conclusion: Apollo’s Texas Gamble Just Became More Interesting

On August 3, Marc Rowan and Greg Abbott celebrated Apollo’s decision to make Austin a major center for the future of Apollo and Athene.

On November 3, Texas voters rejected Abbott.

Texas’s new leadership can investigate whether the state’s financial-sector growth has been accompanied by adequate transparency, regulatory resources, and protections for retirement assets.

The most important questions are straightforward:

How much Texas pension money is invested with Apollo? What fees and risks are embedded in those investments? How are Athene’s insurance obligations supported? And who independently verifies the answers?

By Christopher B. Tobe, CFA
The CommonSense 401k Project | November 5, 2026

Ohio’s New Attorney General Could Be Even More Important to Pension Reform Than Its New Governor

Ohio voters have given their state an extraordinary opportunity.

Amy Acton defeated Vivek Ramaswamy for governor. John Kulewicz defeated Keith Faber for attorney general. Sherrod Brown defeated Jon Husted for the United States Senate.

These election results open the door to a serious examination of Ohio’s public pension establishment and its relationships with politically connected Wall Street firms.

Yesterday, I explained how Governor-elect Amy Acton can expose Ohio’s pension, private equity and data-center money machine.

But Kulewicz may have an even more direct route to pension accountability. 

Ohio’s attorney general is the statutory lawyer for the State Teachers Retirement System of Ohio (STRS).

That means Kulewicz will inherit not only the power to investigate potential wrongdoing but also an office that helped shape the state’s legal response to years of controversy at STRS.

Former Attorney General Dave Yost pursued an aggressive case against reform-oriented trustees Wade Steen and Rudy Fichtenbaum over their involvement with QED, a proposed investment firm with $0 assets and paid $0 fees. Ohio’s next attorney general should investigate why the state devoted substantial legal resources to pursuing pension reformers while retirees spent their own money seeking transparency.

Meanwhile, questions about private equity fees, pension investment performance, extraordinarily high staff compensation and Apollo’s connections to Jeffrey Epstein remained unresolved.

Now a new attorney general can review both sides of that history.

The first question Kulewicz should ask is simple:

Was Ohio’s legal machinery used primarily to protect teachers’ retirement savings—or to protect the existing pension establishment from its critics?

That question deserves an independent, evidence-based investigation.

1. Yost Pursued the Reform Trustees. Who Investigated the Pension Money Machine?

In May 2024, Dave Yost launched a sham investigation into what he described as an attempted takeover of STRS by private interests.

The investigation centered on QED and allegations involving trustees Wade Steen and Rudy Fichtenbaum. 

Why did the state’s most visible pension enforcement effort focus on a proposed investment arrangement with $0 assets and paid $0 fees.while enormous existing private equity investments in $billions in secret no-bid contracts and excessive staff compensation received comparatively little public scrutiny?

QED was not even a real investment firm while the AG helped block the transparency of secret no-bid contracts in the $billions

Ohio Media’s Complicity: How a Fake Scandal Hid the Real Teacher Retirement System Corruption

The new attorney general should determine whether the state’s enforcement priorities were fair, consistent and focused on the greatest financial risks to beneficiaries.

2. The Attorney General Is STRS’s Lawyer. That Changes Everything.

Ohio Revised Code §109.02 designates the attorney general as the state’s chief law officer.

The attorney general’s office represents state agencies, boards and retirement systems, subject to statutory exceptions and provisions governing outside counsel.

Yost’s own office acknowledged this relationship in November 2023 when announcing an outside investigation of allegations involving STRS Executive Director Bill Neville.

This is an extraordinary institutional relationship.

The attorney general’s office can advise the pension system, participate in litigation affecting its trustees and appoint outside lawyers for specialized matters.

That means Kulewicz should not have to approach STRS as a stranger requesting voluntary cooperation.

His office already possesses a legal relationship with the institution.

However, being STRS’s lawyer does not make the attorney general its investment manager, and it does not automatically give him unrestricted access to every privileged document for an adversarial investigation.

The attorney general must identify the client, resolve conflicts, respect attorney-client privilege and use appropriate statutory investigative powers.

Those legal boundaries make an independent review essential.

Kulewicz should immediately commission a comprehensive examination of the attorney general’s historical relationship with STRS, including legal advice, special-counsel appointments, enforcement decisions and potential conflicts.

The investigation should be conducted by lawyers who were not involved in the challenged decisions.

3. The Salary Scandal: STRS Investment Employees Earned Far More Than the People Checking Their Numbers

One of the most troubling findings in my Ohio pension research concerns compensation.

In May 2026, I published:

Ohio STRS Investment Staff: Paid Excessively to Look the Other Way

The compensation data examined in that article revealed a remarkable imbalance.

Position	Reported annual compensation
Chief investment officer	$913,909
Chief financial officer	$193,933
Average investment employee	$180,693
Average accounting employee	$89,686

The chief investment officer received approximately 4.7 times the compensation of the chief financial officer.

The average investment employee earned approximately twice as much as the average accounting employee.

As a CFA charterholder who has worked in institutional investment management, I recognize that investment professionals often earn more than accountants.

But compensation differences of this magnitude demand scrutiny, especially when the highest-paid personnel control opaque private market investments and influence the performance measures used to calculate their bonuses.

The issue is not simply how much money they make.

It is who verifies the numbers.

Investment professionals influence private equity allocations, investment assumptions, manager selection and performance reporting.

Accounting professionals are responsible for financial controls, reconciliation and audited financial reporting.

When the investment side is paid dramatically more than the control side, boards should examine whether independent financial oversight has sufficient authority and resources.

Kulewicz should request a comprehensive compensation review, including salary surveys, bonus formulas, employment contracts and the underlying data supporting claims that such compensation is necessary to retain talent.

The review should also examine whether STRS paid employees for performance that did not actually benefit retirees.

4. The Academic Evidence: STRS Used a More Favorable Performance Number for Bonuses

This may be the strongest reason for an independent attorney general investigation.

In July, I discussed academic research by Allen Mendenhall and Dan Sutter:

New Academic Paper: Ohio STRS Had Two Performance Numbers—And Used the Better One to Pay Bonuses

The researchers examined STRS investment reporting from 2003 through 2022.

Their findings were extraordinary.

In 19 of the 20 fiscal years examined, STRS’s reported investment return exceeded the return the researchers independently calculated from audited financial information.

The average difference was approximately 33 basis points annually.

The researchers estimated that the differences represented approximately $4.8 billion when added across the years, or $9.3 billion on a compounded basis.

These figures are not established investment losses or amounts of improperly paid bonuses. They measure the differences produced by the researchers’ methodology.

But the compensation connection is particularly troubling.

The research reported that STRS used the more favorable internally reported performance figures in determining investment staff bonuses.

Ohio’s Public Employees Retirement System, used as a comparison, exhibited much smaller and more balanced discrepancies.

The research does not prove criminal falsification of accounting records. Different investment-return methodologies can produce legitimate differences.

Nevertheless, the persistent direction of the discrepancies and their relationship to compensation justify independent forensic examination.

Kulewicz should demand a year-by-year reconciliation between the investment performance figures, audited financial information and bonus calculations.

He should ask whether any material representations concerning performance or compensation were misleading, and whether pension assets could be recovered if legal violations are established.

If STRS employees were paid bonuses using performance figures that materially overstated results, Ohio’s attorney general should determine whether those payments were lawful and recoverable.

5. Four Employees Above $600,000. Twenty Above $400,000. What Were Teachers Getting?

My earlier research identified the following compensation distribution in the STRS payroll data examined:

• 4 employees earning more than $600,000.
• 20 earning more than $400,000.
• 49 earning more than $300,000.
• 85 earning more than $200,000.

Such compensation levels double to triple being paid in the private sector for similar investments professionals in Ohio are difficult to justify especially when they rig their own bonuses.

For years, Ohio teachers and retirees experienced restrictions on cost-of-living adjustments while the pension system maintained substantial investment-staff compensation.

Kulewicz should investigate the entire compensation system, including the consultants who helped design and justify it.

Global Governance Advisors was selected because they justified excessive salaries at many other plans.

Were compensation comparisons adjusted for Columbus’s cost of living, job security and public employment benefits?

Did STRS use transparent, investable benchmarks when calculating investment performance?

And did employees receive bonuses despite underperforming simple, lower-cost investment alternatives?

The answers could reveal whether the compensation system served beneficiaries or the employees and consultants who benefited from it.

6. Apollo and Jeffrey Epstein: The Investment Manager Ohio Should Investigate First

The Epstein scandal became a major issue in Ohio’s 2026 Senate election.

Leslie Wexner’s relationship with Epstein attracted substantial attention.

But another financial relationship deserves examination.

Apollo co-founder Leon Black paid Jeffrey Epstein more than $150 million for purported tax and estate-related services, including payments made after Epstein’s 2008 conviction.

Nevertheless, the payments raise serious questions about judgment and governance involving the former leader of a major investment manager.

STRS Ohio has maintained investment relationships with Apollo-managed funds.

I documented these concerns in:

Epstein, Apollo and Ohio Teachers’ Billions

Kulewicz should ask whether STRS and its investment advisers conducted adequate due diligence concerning Apollo’s governance and the Epstein revelations.

He should also investigate Apollo’s investment fees, valuations, returns, conflicts and representations to pension investors.

The immediate objective should be a complete accounting of Ohio pension exposure to Apollo.

The next step should be a moratorium on new commitments while the review proceeds, followed by an orderly divestiture analysis where continued investment cannot be justified under applicable fiduciary standards.

7. The FirstEnergy Lesson: Follow the Money, Not the Political Narrative

Ohio has already experienced a major corruption scandal involving FirstEnergy and House Bill 6.

That scandal demonstrated how corporate money, political influence and weak accountability can intersect.

Public pensions present a different legal and financial structure, but the same basic warning applies.

When billions of dollars move through complicated financial relationships, transparency cannot depend on assurances from the people collecting the fees.

Kulewicz should examine pension-related political contributions, lobbying, placement agents, consultant relationships and charitable contributions that may create conflicts.

The inquiry should also extend to Ohio’s data-center and infrastructure investments where public subsidies and pension capital intersect.

But the investigation must distinguish legitimate commercial relationships from actual misconduct.

The existence of a political donation, private equity investment or professional relationship is not itself evidence of corruption.

The objective should be to identify undisclosed conflicts, misleading representations, violations of fiduciary duties and recoverable financial harm.

8. A First 180-Day Plan for Attorney General Kulewicz

Kulewicz will take office in January 2027.

He should make public pension accountability one of his first priorities.

First 30 days: Establish an independent STRS legal and fiduciary review.

Identify conflicts within the attorney general’s office, appoint independent counsel where necessary and preserve relevant records.

Request the complete QED litigation and investigative record, special-counsel engagement agreements, compensation policies and major investment contracts.

Days 31–90: Investigate salaries, bonuses and performance calculations.

Commission a forensic reconciliation of the Mendenhall–Sutter findings.

Examine investment-staff compensation, consultant benchmarking, valuation policies and bonus formulas.

Identify any legal basis for recovering improper payments.

Days 91–120: Follow Apollo and the private equity money.

Compile Ohio pension commitments, fees, distributions, valuations and reported returns involving Apollo and other major alternative managers.

Review Epstein-related due diligence and material disclosures.

Examine whether the state has potential contractual, fiduciary or other legal claims.

Days 121–180: Publish findings and pursue appropriate legal remedies.

Release a public report separating verified facts, disputed allegations, legal conclusions and matters requiring additional investigation.

Refer potential criminal violations to the appropriate authorities when warranted.

Recommend legislation creating an independent pension inspector general, stronger private investment disclosure, compensation controls and meaningful beneficiary enforcement rights.

9. Kulewicz and Acton Can Work Together—but Their Powers Are Different

Governor-elect Amy Acton can promote pension transparency through appointments, executive leadership, public advocacy and proposed legislation.

Attorney General-elect John Kulewicz has a different set of tools.

His office can provide legal representation, review existing litigation, appoint special counsel and pursue civil enforcement within the limits of Ohio law.

Neither official controls every pension board decision.

But together they can make it substantially harder for questionable compensation arrangements, conflicted investments and inadequate disclosures to escape examination.

The governor can demand political accountability.

The attorney general can demand legal accountability where the law permits.

And both can ask Ohio’s pension systems to demonstrate that they are acting for teachers and retirees rather than for investment managers, consultants or their own employees.

Conclusion: Ohio Needs an Attorney General for Teachers, Not a Lawyer for the Pension Establishment and their Donors in Private Equity

For years, Ohio teachers have watched their retirement system pay enormous salaries, defend opaque private equity investments and resist demands for greater transparency.

Dave Yost’s office pursued reform trustees over the QED controversy.

Why did STRS’s performance numbers differ from independently calculated returns?

Why were investment employees paid so much more than the accountants responsible for financial controls?

Who benefited from private equity fees and opaque valuations?

What did STRS know about Apollo’s governance problems and Leon Black’s extraordinary payments to Jeffrey Epstein?

And did Ohio’s legal establishment devote sufficient attention to those issues?

John Kulewicz should make answering those questions a defining responsibility of his administration.

Gina Hinojosa, Vikki Goodwin, Nathan Johnson, and Sarah Eckhardt have an extraordinary opportunity to expose hidden pension fees, private-market risks, politically directed investments, and taxpayer subsidies. They should begin investigating before waiting for new legislation.

By Christopher B. Tobe, CFA, CAIA
The CommonSense 401k Project | November 4, 2026

Texas Just Had a Political Earthquake

On November 3, Texas voters delivered a historic rejection of the state’s Republican leadership.

After more than three decades of Republican governors, Democrat Gina Hinojosa defeated Greg Abbott.

Democrat Vikki Goodwin defeated Lieutenant Governor Dan Patrick.

Democrat Nathan Johnson won the attorney general’s office.

And Democrat Sarah Eckhardt defeated Don Huffines for state comptroller.

The results are historic. But the real question is what these new officials will do with the powers voters have handed them.

Texas has some of America’s largest public pension systems, an enormous private equity and private credit industry, massive data-center development, and an increasingly complicated network of public subsidies, financial managers, political organizations, and investment consultants.

These issues are interconnected.

Texas public employees and teachers contribute to pension systems investing billions of dollars through Wall Street.

Private equity managers collect fees, carried interest, and other compensation.

Data-center developers seek favorable tax treatment and public infrastructure.

Financial firms influence investment policy through lobbying, campaign contributions, trade associations, and sometimes opaque political networks.

Meanwhile, state laws can require pension trustees to make politically directed investment decisions.

The new Texas leadership has an opportunity to investigate all of it.

The good news is that much of this work can begin without passing a single new law.

1. Governor Gina Hinojosa: Open the Books

The governor should begin with a comprehensive review of Texas public pension governance.

The Teacher Retirement System of Texas (TRS) and Employees Retirement System of Texas (ERS) manage enormous retirement obligations.

Texas also has major county, municipal, and other retirement systems.

Their investment programs increasingly include private equity, private credit, real estate, infrastructure, and other investments whose true costs and risks can be difficult for beneficiaries to understand.

Hinojosa should make public pension transparency an immediate administrative priority.

She can request comprehensive information from state agencies, appoint qualified and independent officials where vacancies and statutory appointment powers permit, and propose legislation requiring greater disclosure.

But the governor cannot simply order independent pension boards to abandon investments or rewrite existing contracts.

Texas public retirement systems have statutory and constitutional governance protections.

That makes transparency, independent oversight, and carefully drafted legislation essential.

Start with the real cost of private equity

The public deserves to know more than the management fee reported in a pension system’s annual report.

Private equity managers may collect:

• Management fees.
• Carried interest.
• Transaction and monitoring fees.
• Portfolio-company payments.
• Financing and subscription-line expenses.
• Affiliate fees.
• Fees generated through continuation vehicles.

These expenses can be deducted within investment partnerships or portfolio companies rather than appearing as straightforward checks written by the pension system.

Texas should require reporting of the total economic cost borne by each pension fund, without double counting.

A public pension system should not claim to have a low-cost investment program if its reporting omits material costs embedded in private funds.

2. Lieutenant Governor Vikki Goodwin: Use the State Auditor

One of the most important election results may be Vikki Goodwin’s defeat of Dan Patrick.

Why?

Because the lieutenant governor plays an important role in overseeing the Texas State Auditor.

The State Auditor operates under the Legislative Audit Committee, jointly chaired by the lieutenant governor and the speaker of the Texas House.

Under Chapter 321 of the Texas Government Code, the State Auditor has substantial authority to examine state agencies, public expenditures, and government programs.

Goodwin should make pension investment transparency and data-center subsidies priorities for independent audit review.

The Legislative Audit Committee must follow its statutory procedures, and Goodwin cannot unilaterally direct every audit.

But she can advocate an ambitious audit agenda.

Audit the pension consultants

Texas should examine the independence of firms hired to advise pension trustees and evaluate investment performance.

The central question is simple:

Who investigates Wall Street when the investigator also has Wall Street clients or owners?

Private equity-owned consulting firms, benchmarking providers, valuation specialists, and investment-cost evaluators should disclose their beneficial ownership and material commercial relationships.

A consultant should not be treated as independent merely because its contract describes it that way.

An independent audit should determine whether consulting firms have financial relationships with the managers whose performance or expenses they evaluate.

That includes indirect ownership interests and compensation arrangements.

The investigation should also determine whether consultants recommended benchmarks that made private investments appear more successful than appropriate public-market alternatives.

3. Attorney General Nathan Johnson: Enforce the Public’s Right to Know

Texas already has a remarkably strong statement of principle in Government Code Section 552.0225.

The statute recognizes that government investments are investments made for the people and that the public is entitled to information concerning them.

It specifically identifies categories of investment information that must be disclosed.

This is a powerful starting point.

Attorney General Nathan Johnson should review how public pension systems apply these disclosure requirements.

Are pension systems providing meaningful information about private equity fees?

Are they identifying the actual investment managers and controlling entities?

Are they disclosing investment agreements and financial terms where the law requires disclosure?

Are public-records exemptions being interpreted more broadly than necessary?

The attorney general has authority to issue certain legal opinions, represent state agencies, and enforce laws within the limits of the office’s statutory jurisdiction.

The AG should use those powers to strengthen compliance with Texas public-information requirements.

However, the attorney general cannot automatically compel disclosure of every confidential partnership agreement or initiate criminal prosecutions without the jurisdiction required by law.

That is why the proposed transparency legislation matters.

It would clarify which investment economic terms must be public and establish enforceable rights for pension beneficiaries and taxpayers.

Investigate actual misconduct, not merely unpopular investments

Where evidence supports possible fraud, undisclosed conflicts, deceptive reporting, or misuse of public resources, appropriate investigative authorities should examine it.

Investment losses alone do not establish wrongdoing.

Neither does a private equity manager’s political affiliation.

The proper standard is evidence.

But confidentiality should not become an excuse for avoiding accountability.

4. Comptroller Sarah Eckhardt: Follow the Tax Subsidies

Sarah Eckhardt may have one of the most important financial accountability jobs in Texas.

The comptroller is responsible for major state tax administration, accounting, revenue estimates, and fiscal reporting.

The office also has substantial responsibilities involving state economic-development incentives.

Texas is experiencing an extraordinary expansion of data centers, AI infrastructure, electricity generation, transmission projects, and related private investment.

Companies and developers may receive state or local incentives, tax exemptions, infrastructure support, or other public benefits.

The comptroller should create a comprehensive public accounting of these arrangements.

For each material data-center project, Texans should be able to determine:

1. How much private capital was invested?
2. How much state and local tax revenue was forgone?
3. What public infrastructure was required?
4. How much electricity and water will the facility consume?
5. How many permanent jobs were created?
6. What is the public subsidy per permanent job?
7. Who ultimately owns the project?

Existing confidentiality laws may prevent immediate release of certain taxpayer-specific information.

The comptroller should publish what current law permits and request legislation authorizing additional project-level disclosure.

The data-center question is bigger than tax breaks

Electricity demand is becoming a major economic issue.

Data centers can require substantial generation, transmission, and distribution investments.

If infrastructure costs are shifted to ordinary households and small businesses, the public may effectively subsidize private development through utility bills.

The state should independently examine these costs.

And the pension systems should disclose whether they invest in the companies financing the same projects.

Texans deserve to know whether they are subsidizing a data center as taxpayers, financing its infrastructure as ratepayers, and investing in it through their retirement savings.

Those relationships may be economically legitimate.

But they should not be invisible.

5. Railroad Commissioner Jon Rosenthal: Follow the Energy Infrastructure

Another important election result was the victory of Democrat Jon Rosenthal for the Texas Railroad Commission.

The commission regulates important parts of the state’s oil and gas industry.

Rosenthal has discussed energy costs, pollution, and data-center development.

His office can contribute to the broader investigation by examining matters within the commission’s jurisdiction, including relevant natural-gas infrastructure and pipeline issues.

However, the Railroad Commission does not generally regulate electric utility rates or approve all data-center construction.

Those responsibilities involve other authorities, including the Public Utility Commission, ERCOT, local governments, and environmental regulators.

The new administration should coordinate these agencies rather than pretend any single official controls the entire energy system.

6. Texas’s Anti-ESG and Anti-BDS Laws Need Reconsideration

Texas has adopted politically directed investment and contracting restrictions affecting financial companies and public pension systems.

Two particularly important statutes are:

Government Code Chapter 808, addressing investments in companies that boycott Israel.

Government Code Chapter 2271, imposing certain Israel-boycott-related contracting certification requirements.

Texas also has separate restrictions involving financial companies accused of boycotting energy companies.

These policies raise an important fiduciary question.

Should public pension trustees make investment decisions based on political lists established by state officials, or should they focus on investment risk, return, costs, and obligations to beneficiaries?

The new administration should review the economic consequences of these restrictions.

How much did compliance cost?

Were investment opportunities lost?

Did pension systems incur additional transaction expenses?

Were managers excluded for reasons unrelated to their expected investment performance?

The state should also examine whether these restrictions created political advantages for particular financial firms.

A consistent fiduciary standard

My position is straightforward.

Public pension assets should be managed for the benefit of participants and beneficiaries.

Trustees should be able to consider financially material environmental, social, governance, geopolitical, and human-rights risks.

But investment decisions should be supported by documented fiduciary analysis.

Neither anti-ESG politics nor an ESG label should substitute for independent investment judgment.

Texas should repeal unnecessary political investment mandates and replace them with transparent fiduciary standards.

This would require legislative action, not merely an executive order.

7. Private Equity’s Hidden Risks Deserve Their Own Investigation

Private equity and private credit create several transparency problems that are especially serious for public pension systems.

Valuations

Publicly traded stocks are generally valued using observable market prices.

Private assets often depend on models, assumptions, appraisals, and manager-controlled estimates.

This creates opportunities for delayed recognition of losses and artificially smooth reported returns.

Pension systems should disclose valuation methodologies, material overrides, appraisal delays, and differences between reported net asset values and actual secondary-market transaction prices.

Liquidity

Private investments may impose redemption restrictions, extended holding periods, and significant exit costs.

These risks become particularly important when pension systems need cash to pay retirement benefits.

Benchmarks

Private equity managers should not be permitted to justify their fees by comparing themselves with benchmarks that are easy to outperform.

Public pension systems should publish independent, low-cost, investable reference portfolios.

Conflicts

When the same financial organization advises pension trustees, manages investments, evaluates performance, and sells related products, conflicts may be difficult to identify.

The solution is full disclosure of ownership, compensation, and related-party transactions.

8. Texas Needs a Public Pension Inspector General

The existing State Auditor is an important institution.

But Texas should also consider creating an independent Office of Public Pension Inspector General.

The office should have authority to examine pension investment contracts, obtain relevant records, investigate conflicts, and report publicly.

Its leadership should be protected from arbitrary political removal.

Its budget should be sufficient to investigate complex private equity arrangements.

And it should be prohibited from hiring conflicted consultants as supposedly independent investigators.

The inspector general should coordinate with the State Auditor, attorney general, Pension Review Board, and other relevant agencies.

This would create a permanent accountability structure rather than relying on occasional political investigations.

9. I Have Prepared a Texas Legislative Model

The proposed Texas Public Pension Transparency, Accountability, and Data Center Risk Act of 2027 provides a starting point.

The discussion draft includes:

• Comprehensive private equity and private credit fee disclosure.
• Underlying investment and beneficial ownership transparency.
• Independent verification of valuations and performance benchmarks.
• Disclosure of political contributions, lobbying, and pension-related dark-money arrangements.
• Data-center electricity, water, tax subsidy, and infrastructure reporting.
• Cryptocurrency and digital-asset exposure reporting.
• Executive compensation and bonus transparency.
• Provider integrity investigations.
• Private enforcement rights for pension participants and appropriately qualified taxpayers.
• An independent pension oversight study.
• Repeal of specified anti-BDS investment and contracting restrictions.

These proposals would require review by Texas legislative counsel, particularly regarding sovereign immunity, pension trust protections, taxpayer standing, contractual rights, and constitutional limits.

But the bill provides a framework for closing disclosure gaps that existing administrative authority cannot fully address.

10. The First 100 Days: What the New Texas Leadership Should Do

The incoming officials should announce a coordinated financial transparency initiative.

Governor Hinojosa should request independent pension governance reviews, identify opportunities for appointments of qualified fiduciaries, and make transparency legislation an administration priority.

Lieutenant Governor Goodwin should seek Legislative Audit Committee approval for reviews of public pension expenses, consultant independence, and data-center subsidies.

Attorney General Johnson should review compliance with Texas investment-information disclosure requirements and examine legally supportable enforcement actions.

Comptroller Eckhardt should develop a statewide accounting of data-center tax expenditures, public subsidies, and economic-development commitments.

Railroad Commissioner Rosenthal should investigate relevant energy infrastructure and coordinate with utility and environmental regulators.

The agencies should establish clear timelines, preserve relevant records, and publish their findings.

An initial 100-day report could identify available data, major disclosure gaps, legal barriers, and recommended legislation.

Texas Has a Chance to Become the National Model

For decades, Wall Street has benefited from the complexity of public pension investing.

Private equity fees are difficult to understand.

Private credit valuations are difficult to verify.

Consultant relationships are not always transparent.

Data-center subsidies are spread across multiple government programs.

Political organizations can influence investment policy without ordinary pension beneficiaries understanding the financial consequences.

Texas has an opportunity to change that.

The November election delivered a new governor, lieutenant governor, attorney general, comptroller, and other statewide officials.

They should use the authority of their offices to begin asking questions immediately.

But they should also recognize the limits of executive power.

The strongest solution combines independent audits, lawful enforcement, public disclosure, and carefully drafted legislation.

The objective is not to replace one political investment agenda with another.

It is to restore accountability to the people whose money is being invested.

Follow the pension money.

Follow the private equity fees.

Follow the political contributions.

Follow the data-center subsidies.

Follow the electricity bills.

And when those financial trails intersect, require public officials and investment managers to explain who benefited and what it cost.

Texas voters have changed the people running the state.

Now those officials have an opportunity to change who gets to see the books.

---

Sources and further reading

• Texas Secretary of State — November 3, 2026 Election Results
• Texas Tribune — Democrats Seize Power in Texas
• Texas State Auditor — Authority and Responsibilities
• Texas State Auditor — Legislative Audit Committee
• Texas Comptroller — Agency Responsibilities
• Texas Pension Review Board — Statutes and Rules
• Texas Government Code §552.0225 — Public Investment Information
• Texas Government Code §552.0221 — Pension Employee and Trustee Compensation

Wilshire, CEM, Apollo’s indirect connections, questionable benchmarks, hidden investment costs, and Wall Street’s influence over Iowa’s public pensions deserve a genuinely independent investigation.

By Christopher B. Tobe, CFA, CAIA
The CommonSense 401k Project | November 4, 2026

Iowa Voters Just Created an Extraordinary Opportunity

Iowa voters did something remarkable on November 3.

They elected Democrat Rob Sand as governor, defeating Republican Zach Lahn and ending Republican control of the governor’s office.

They also elected Democrat Nate Willems as attorney general, defeating Republican incumbent Brenna Bird.

Sand has spent years as Iowa’s state auditor. Willems campaigned on protecting workers, consumers, and ordinary Iowans.

Now they have an opportunity to confront one of the most important financial accountability problems in the state.

The approximately $47 billion Iowa Public Employees’ Retirement System (IPERS) has been engulfed in questions about investment performance, hidden private equity fees, misleading benchmarks, executive compensation, and the independence of Wall Street consultants.

Meanwhile, Iowa is handing out substantial tax incentives to data centers operated by Google, Microsoft, Meta, and others.

These may appear to be separate stories.

They aren’t necessarily.

Public pension money flows into private equity, private credit, real estate, and infrastructure. Those same financial markets increasingly finance data centers, electricity generation, transmission, and artificial intelligence infrastructure.

Iowa taxpayers help subsidize the facilities.

Iowa ratepayers help support the electrical infrastructure.

Iowa public employees supply billions of dollars to Wall Street investment managers.

And the investment managers collect fees.

The new governor and attorney general should investigate both sides of this transaction.

The important question is not whether every investment or tax incentive is improper.

It is why the public cannot easily determine where all the money goes.

Timothy Tucker Has Already Done Much of the Investigative Groundwork

One of Iowa’s most important independent investigative journalists is Timothy C. Tucker, founder of Restoring Democracy’s Promise.

Tucker has produced a remarkable series of investigations into IPERS, using court documents, payroll records, public-records requests, and government filings.

His reporting deserves the attention of the incoming Sand administration.

A former IPERS investment risk and operations officer, Rich Wiggins, filed litigation alleging serious problems involving the pension fund’s investment risk reporting, performance benchmarks, management fees, and executive compensation.

Wiggins alleged that substantial portions of the portfolio were benchmarked in ways that made underperformance difficult or impossible to identify.

He also alleged that the fund understated the true costs of private-market investments.

These are allegations in pending litigation, not established findings of wrongdoing.

But the lawsuit survived an important motion to dismiss in April 2026.

The issues warrant an independent examination.

Tucker’s April investigation, Newly Obtained Amended IPERS Lawsuit Expands Allegations on Risk, Fees, and Benchmarking, describes the allegations in detail.

His May follow-up, A Resignation Is Not an Audit, makes another important point.

Changing pension executives does not establish whether the underlying investment practices were appropriate.

Former IPERS CEO Greg Samorajski resigned in 2026, and other senior personnel changes followed.

But personnel changes are not a substitute for forensic accounting.

The public deserves an investigation of the money, not merely an explanation of the personnel changes.

Tim McGlinn Exposes the Benchmarking Problem

Investment professional Tim McGlinn, CFA, writing at The AltView, has produced some of the most important independent analysis of IPERS investment performance.

His April 24 article, Motion Denied! IPERS Update, Featuring Wilshire and CEM Benchmarking, identifies several troubling practices.

Among them:

• Private-market investments reportedly benchmarked against their own returns, potentially eliminating meaningful tracking error.
• Passive international equity investments appearing to generate persistent benchmark outperformance.
• Hedge-fund exposures compared against Treasury bills despite substantially different risks.
• Investment overlays that complicate the interpretation of asset-class returns.
• Cost comparisons that exclude significant categories of private-market expenses.

The self-benchmarking problem is especially serious.

Imagine a private equity portfolio loses 20%.

If the benchmark is effectively the portfolio’s own return, the investment can lose money while reporting little or no underperformance against that benchmark.

The pension system can appear to have met its performance standard even when its members have suffered significant investment losses.

This is not a meaningful test of whether private equity justified its costs and risks.

McGlinn also argues that a conventional stock-and-bond reference portfolio provides a much less flattering comparison with IPERS’s reported results.

Such comparisons require careful matching of risk, asset allocation, and time periods. But that is precisely why the pension system should publish independent, investable reference benchmarks alongside its internally constructed policy benchmarks.

A benchmark should measure performance. It should not manufacture success.

Wilshire: Who Is Really Advising Iowa’s Pension Fund?

IPERS identifies Wilshire as its investment management consultant.

Wilshire has worked with IPERS for decades.

In 2021, Wilshire announced an expanded six-year contract covering private markets advisory services and risk analytics.

That creates an obvious question.

If IPERS’s investment benchmarks and risk reporting have serious weaknesses, what did its consultant know, recommend, review, or approve?

Wilshire is also no longer simply an independent consulting firm owned by its employees.  It is tied to Apollo Global Management in its structure a manager for IPERS and the owner of a leading insurer in the state Athene.

When a private-equity-owned consultant evaluates private equity investments, what conflicts exist between its owners’ commercial interests and its responsibility to pension beneficiaries?

Wilshire’s ownership and potential conflicts should be fully disclosed.

The review should identify:

• Current beneficial owners and ownership percentages.
• Any Apollo-related indirect economic interests.
• Material relationships between Wilshire, its owners, and IPERS investment managers.
• Compensation from private equity firms and other institutional clients.
• The role Wilshire played in constructing, reviewing, or approving IPERS benchmarks.

CEM Benchmarking: How Can Iowa Be So Cheap When Its Fees Are So High?

The second consulting relationship deserving scrutiny is CEM Benchmarking.

IPERS has used CEM to compare its investment expenses with those of other public pension systems.

McGlinn reports that CEM repeatedly characterized IPERS as exceptionally low-cost.

But the problem is what gets counted.

According to reporting on IPERS’s December 2025 investment board meeting, the system’s reported investment costs of approximately 13.7 basis points could increase to roughly 70 basis points when estimated private equity and private credit incentive fees and carried interest were included.

That is an extraordinary difference.

On a $47 billion portfolio, those two expense rates imply:

Expense measure	Annualized cost
13.7 basis points	$64.4 million
70 basis points	$329.0 million
Difference	$264.6 million

These are illustrative calculations using a common $47 billion asset base, not independently audited IPERS expense totals. The 70-basis-point figure includes estimated costs and may not be directly comparable with the narrower reported measure.

Nevertheless, the difference is enormous.

A cost comparison that excludes carried interest, incentive fees, and underlying private equity expenses can make an expensive investment program look inexpensive.

CEM’s methodology may have been applied consistently within its peer group. But that does not answer whether the comparison captures the full economic cost borne by Iowa pension beneficiaries.

There is also an ownership issue.

CEM has been linked to McKinsey, one of the world’s most influential consulting firms, which maintains substantial relationships throughout the private equity industry.

Iowa should establish CEM’s current ownership, relevant commercial relationships, and the independence of its methodology.

Who evaluates the evaluators?

That question should be central to the new administration’s pension investigation.

The Bonus Problem: Two Basis Points of Outperformance

Timothy Tucker uncovered another extraordinary issue.

IPERS Chief Investment Officer Sriram Lakshminarayanan received three consecutive annual payments of $25,000 categorized as exceptional job performance pay, according to Tucker’s examination of payroll records.

For fiscal 2025, IPERS reported an investment return of 9.87%.

Its policy benchmark returned 9.85%.

That is an excess return of just two basis points.

On $47 billion, two basis points represents approximately $9.4 million, although that arithmetic does not establish that the excess return caused any particular bonus.

The larger issue is the compensation formula.

If investment managers can influence the benchmarks used to evaluate their performance, and those benchmarks influence their compensation, an obvious conflict arises.

Tucker’s August investigation, The Formula Behind the $25,000: What Iowa’s Next Governor Inherits, examines the compensation documents.

McGlinn subsequently connected the incentive structure to the broader benchmark debate in IPERS: From Fake Outperformance to Real Cash Bonuses.

An independent investigation should determine whether the compensation system rewarded genuine investment skill or results measured against insufficiently demanding benchmarks.

This does not require assuming that any executive violated the law.

It requires independently examining the benchmarks, performance calculations, and compensation approvals.

Iowa DOGE: Was Pension Privatization Becoming a Business Opportunity?

The pension controversy extends beyond investment management.

Former Governor Kim Reynolds established an Iowa DOGE task force to recommend government efficiency measures.

One participant was Kathy Kay, an executive vice president at Principal Financial Group.

The task force recommended replacing traditional IPERS participation for new employees with a defined-contribution-style retirement arrangement.

Principal is a major provider of 401(k) and other retirement products.

That combination deserves scrutiny.

Tucker’s August 2025 investigation, Hidden Conflict Could Hand $42.9 Million to Iowa Task Force Member’s Firm, modeled the potential financial consequences.

His analysis estimated that the proposed arrangement could generate approximately $143 million in investment-management fees over ten years.

Under an illustrative scenario in which Principal obtained 30% of the business, approximately $42.9 million could flow to Principal.

Those figures are modeled possibilities, not established revenues or evidence that Principal would win the business.

But the conflict question remains.

Why was an executive of a retirement-services company participating in a government process that could create new business opportunities for companies in that industry?

Were the relationships disclosed?

Were conflicts evaluated?

Was an independent economic analysis performed?

The new governor should preserve traditional pension benefits while independently evaluating any proposal that shifts investment and longevity risks from the pension system onto individual public employees.

Iowa’s Anti-ESG Network Reaches Directly Into IPERS

Another connection deserves attention.

Iowa Treasurer Roby Smith is affiliated with the State Financial Officers Foundation, or SFOF.

SFOF has been an important organization in the national campaign against ESG investing.

But Smith is not simply a politician expressing views about investment policy.

He also serves as an ex officio voting member of the IPERS Investment Board.

That board exercises meaningful authority over pension investment policy and investment service providers.

This creates a direct institutional connection:

SFOF → Iowa Treasurer Roby Smith → IPERS Investment Board → public pension investment oversight.

Smith was reelected in November 2026, meaning the incoming Sand administration will inherit this relationship.

I have previously examined similar connections involving Ohio and Kentucky.

In my article, Allison Ball’s ESG Shell Game: Follow the Money From Kentucky to KKR to SFOF, I argued that anti-ESG politics should not become a distraction from more fundamental investment conflicts.

The same principle applies in Iowa.

If SFOF-affiliated officials believe pension funds should not use retirement money for political objectives, they should apply that standard consistently.

That means examining private equity managers, private credit firms, infrastructure investors, and investment consultants—not merely public-market managers criticized for ESG policies.

The next investigation should compare SFOF’s corporate sponsors with IPERS investment managers and consultants.

It should examine relevant political contributions, meetings, contracting decisions, and recusals.

Membership in SFOF is not evidence of improper conduct.

But public pension governance should be transparent enough to establish whether political relationships affected financial decisions.

Apollo, Athene, and Iowa’s Insurance Industry

Iowa is also an important insurance state.

Athene, the retirement-services and annuity company associated with Apollo Global Management, has substantial Iowa operations.

Apollo’s ownership of Athene places the company within the broader private equity and insurance ecosystem that has attracted increasing scrutiny over private credit, affiliated investments, and opaque valuations.

Athene’s Iowa employment footprint makes it an important economic stakeholder.

Iowa’s new administration should examine how the state’s insurance industry, private credit investments, and public pension assets interact.

The Wilshire-Motive-Apollo relationship adds another reason to require complete ownership disclosures.

The inquiry should also identify any material political contributions or lobbying by relevant firms and their executives, distinguishing individual contributions from corporate spending and verified relationships from speculation.

Iowa should not wait for another financial crisis before requiring meaningful transparency from institutions managing long-term retirement promises.

Iowa’s Data-Center Gold Rush: Follow the Taxpayer Money

The second major investigation should focus on Iowa’s data centers.

Google, Microsoft, Meta, and other companies have invested billions of dollars in Iowa facilities.

These investments provide economic benefits, including construction activity, permanent employment, and tax revenues.

But Iowa also offers significant tax exemptions and other incentives.

Qualifying data centers can receive exemptions involving equipment, cooling infrastructure, electricity, and other eligible purchases, subject to statutory conditions and limitations.

The state should publish the value of these incentives by project.

How much tax revenue is Iowa giving up?

How many permanent jobs are created?

How much electricity and water do these facilities require?

Who pays for the transmission lines and power generation necessary to support them?

And are ordinary households and small businesses subsidizing infrastructure built primarily for large technology companies?

These questions become particularly important as artificial intelligence accelerates electricity demand.

The Sand administration should commission an independent statewide data-center cost-benefit audit.

It should calculate the total public subsidy per permanent job and identify which infrastructure costs are paid by developers, utilities, taxpayers, and ratepayers.

The point is not to declare every data center a bad investment.

It is to determine whether the public is receiving a fair return.

Now Follow the Pension Money Into the Same Industry

As of March 2025, IPERS held approximately $44.7 billion in assets, with roughly 31% invested in private markets.

That included approximately:

• $7.9 billion in private equity.
• $3.1 billion in private real assets.
• $2.8 billion in private credit.

IPERS investment records identify relationships with major alternative-investment managers, including Blackstone, Brookfield, Ares, KKR, and others.

These firms participate in financial markets that increasingly fund digital infrastructure, electricity generation, transmission, and data centers.

This does not establish that a particular IPERS fund financed a particular Iowa data center.

That is precisely the disclosure problem.

A pension report identifying an investment as private equity or infrastructure tells beneficiaries little about the underlying businesses and projects.

IPERS should publish a look-through report identifying its direct and indirect exposures to data centers, AI infrastructure, power generation, utilities, digital infrastructure, and related private credit.

For each material exposure, the public should be able to identify the manager, underlying assets, investment value, leverage, valuation method, fees, carried interest, and relevant conflicts.

Iowa taxpayers deserve to know where their tax incentives go.

Iowa public employees deserve to know where their pension contributions go.

Sometimes those financial trails may intersect.

That is why the investigations should be conducted together.

What Governor Sand and Attorney General Willems Should Do

The election creates an opportunity, but the governor and attorney general do not possess unlimited authority over IPERS, private contracts, or local economic-development arrangements.

The Republican-controlled Legislature will remain an important obstacle to statutory reform.

The new administration should therefore begin with powers already available under Iowa law, pursue voluntary disclosure, and seek legislation where necessary.

I would recommend seven immediate priorities.

1. Commission an independent IPERS forensic review.

Examine investment performance, benchmarks, risk reporting, total economic costs, consultant conflicts, and executive compensation. Use investigators with no material financial relationship to the managers being evaluated.

2. Review Wilshire and CEM Benchmarking.

Require complete ownership and conflict disclosures. Independently evaluate the methodologies used to measure private-market performance and costs.

3. Investigate the Wiggins allegations.

Preserve relevant records and review the issues raised in the pending litigation, while respecting the judicial process and the rights of all parties.

4. Audit Iowa’s data-center subsidies.

Publish project-level public costs, permanent jobs, electricity and water requirements, infrastructure obligations, and subsidy effectiveness, subject to lawful confidentiality protections.

5. Require private-market look-through transparency.

Identify underlying investments, fees, carried interest, leverage, valuation assumptions, and material data-center and energy exposures.

6. Review political and commercial conflicts.

Examine the Iowa DOGE pension proposal, Principal-related conflict questions, SFOF relationships, political spending, and investment-provider contracting.

7. Pursue an Iowa Public Pension Transparency and Accountability Act.

The legislation should establish enforceable disclosure requirements, independent valuation and benchmarking, whistleblower protections, meaningful conflict rules, and appropriate judicial remedies.

An independent public pension inspector general would be a particularly important structural reform.

The Election Was Only the Beginning

Rob Sand has spent years presenting himself as an independent-minded auditor willing to challenge government waste and misconduct.

Nate Willems has promised greater attention to workers and consumers.

Now they have an opportunity to apply those principles to one of Iowa’s largest financial institutions.

They need to look closer at  IPERS executives, Wilshire, CEM, Principal, Apollo, demand records, examine conflicts, independently verify performance and expenses, and publish the findings.

The public pension system belongs to Iowa’s public employees and retirees.

The tax revenue belongs to Iowa’s taxpayers.

The electrical infrastructure serves Iowa’s communities.

And the government officials overseeing these resources owe the public accountability.

Timothy Tucker and Tim McGlinn have already identified important questions.

The new administration has an opportunity to turn those questions into a comprehensive, independent examination.

The CommonSense lesson from Ohio, Kentucky, and now Iowa is simple:

Follow the pension money.

Follow the private equity fees.

Follow the consultants.

Follow the political relationships.

Follow the data-center subsidies.

And follow the electricity bills.

In Iowa, follow the money twice—once from taxpayers into the data centers, and again from public employees through Wall Street.

If those trails intersect, the public deserves to know who benefited, what risks were taken, and how much was paid along the way.

---

Selected sources and further reading

• Timothy C. Tucker, Newly Obtained Amended IPERS Lawsuit Expands Allegations on Risk, Fees, and Benchmarking, April 2026.
• Timothy C. Tucker, A Resignation Is Not an Audit, May 2026.
• Timothy C. Tucker, The Formula Behind the $25,000, August 2026.
• Timothy C. Tucker, Hidden Conflict Could Hand $42.9 Million to Iowa Task Force Member’s Firm, August 2025.
• Tim McGlinn, Motion Denied! IPERS Update, Featuring Wilshire and CEM Benchmarking, April 2026.
• Tim McGlinn, IPERS: From Fake Outperformance to Real Cash Bonuses, September 2026.
• Tim McGlinn, Two-ish Percent Is the New 4–6%: Private Equity’s New World, Featuring Wilshire, October 2026.
• IPERS FY2025 Annual Comprehensive Financial Report.
• Iowa Public Radio — 2026 election coverage.
• The CommonSense 401k Project, Kentucky’s Pension Fee Bounty: Who Investigates Apollo When Apollo Is Connected to the Investigator?.

Ohio’s new Democratic governor faces a Republican legislature. But she can begin investigating the billions flowing through public pensions, Wall Street, political networks and private infrastructure without waiting for legislative approval.

By Christopher B. Tobe | The CommonSense 401k Project | November 4, 2026

Amy Acton’s victory over Vivek Ramaswamy represents more than a change in Ohio’s governor’s office.

It creates an extraordinary opportunity to investigate a financial and political system I have been documenting throughout 2026: the intersection of Ohio’s public pensions, private equity, excessive investment-staff compensation, politically connected Wall Street firms, data centers, cryptocurrency and questionable investment performance reporting.

Republicans still control the Ohio legislature. That will make comprehensive pension transparency legislation difficult.

But Acton does not have to wait for the legislature to begin asking the questions Ohio’s political establishment has avoided.

Who is making money from Ohio’s public pensions? Who is measuring the investment performance? Who decides whether pension executives deserve enormous bonuses? And why is so much of the underlying financial information hidden from the teachers, retirees and taxpayers whose money is at risk?

As someone who began investigating pension corruption in Kentucky in 1997, I have seen how pension scandals can survive changes in political leadership. The investment managers stay. The consultants stay. The contracts stay secret. And the money keeps flowing.

Ohio’s new governor has an opportunity to interrupt that cycle.

Ohio STRS Had around 100 staffers making more than the Governor in a rigged bonus system.

Perhaps the strongest reason for Acton to initiate an independent investigation is the academic research I discussed in July:

New Academic Paper: Ohio STRS Had Two Performance Numbers—And Used the Better One to Pay Bonuses

Ohio STRS Responds to Charges It Gamed Its Own Bonuses—With More Games

Researchers Allen Mendenhall and Dan Sutter examined 20 years of State Teachers Retirement System of Ohio performance reporting.

Their findings raise serious questions about how STRS measures investment performance and compensates its investment staff.

• 4 STRS employees earned more than $600,000.
• 20 earned more than $400,000.
• 49 earned more than $300,000.
• 85 earned more than $200,000.

According to their analysis:

• STRS’s reported investment return exceeded the authors’ independently calculated return based on audited financial information in 19 of 20 fiscal years, from 2003 through 2022.
• The average annual difference was approximately 0.33 percentage points.
• The authors estimated a cumulative difference of approximately $9.3 billion when compounded over the period.
• The more favorable internally reported performance figures were used in determining investment-staff bonuses.

Why should investment employees receive substantial bonuses while retired teachers have experienced years of inadequate cost-of-living adjustments?

STRS responded by hiring a consultant GCA who justified excessive bonuses in other plans around the county. The Consultant Behind the Public-Pension Pay Machine: GGA Helped Legitimize Excessive Pay at CalPERS, STRS Ohio and Ontario OMERS

Acton’s first pension investigation should demand a compensation review of the over 100 public pension officials who make more than her $180,203 a year.

.

Ohio Teachers’ Billions, Apollo and the Epstein Questions

In February, I published:

Epstein, Apollo and Ohio Teachers’ Billions

And:

Ohio’s Epstein Blind Spot: While Wexner Dominates Headlines, Apollo’s Leon Black Remains in the Shadows

Ohio has devoted considerable attention to Leslie Wexner’s historical relationship with Jeffrey Epstein.

But public pension oversight should also examine Apollo Global Management, whose former CEO Leon Black paid Epstein more than $150 million for purported financial and other services.

Those payments are documented. They do not establish that Ohio pension investments were used to fund Epstein or that every Apollo investment was improper.

The fiduciary questions concern investment due diligence, reputational risk, conflicts, fees and the adequacy of disclosures.

STRS has invested with Apollo-managed vehicles.

In 2021, the Ohio Retired Teachers Association commissioned a forensic review titled The High Cost of Secrecy.

That review estimated approximately $8.6 billion in alternative-investment underperformance against selected benchmarks and more than $420 million annually in previously unreported alternative-investment fees.

Acton’s commission should seek a complete accounting of Ohio pension investments with Apollo and other major alternative managers, including fees, carried interest, returns, fund structures, due diligence and investment committee decisions.

It should examine how the systems responded when the Black–Epstein relationship became public.

It should also examine the broader treatment of STRS reform trustees Wade Steen and Rudy Fichtenbaum, including the investigations and litigation surrounding their efforts to challenge existing investment practices.

The important distinction is between legitimate investigation of conflicts and proof of misconduct.

Pension trustees should be encouraged to ask difficult questions about Wall Street—not discouraged from examining billions in public retirement assets.

Ramaswamy Lost. The Financial Networks Still Deserve Scrutiny.

Throughout 2026, I examined relationships involving Vivek Ramaswamy, private equity, the State Financial Officers Foundation, Ohio officials, pension governance and financial interests in emerging industries.

Among those investigations:

Vivek Ramaswamy, Private Equity and Ohio’s Public Pensions

Ohio STRS: Follow the Money—and Follow QED’s Seth Metcalf, SFOF and Ramaswamy Connection

Ramaswamy, Crypto Money, Data Centers, Jeffrey Epstein and Ohio Pensions

Ramaswamy’s defeat does not make those questions irrelevant.

The political and financial relationships involving pension managers, public officials, campaign contributors, energy companies and private-market investors deserve examination regardless of who wins an election.

The controversy surrounding QED and Seth Metcalf is particularly revealing.

Ohio authorities focused considerable attention on reform trustees associated with a proposed investment concept involving QED.

Yet the central point in my reporting was that STRS ultimately invested no pension money with QED and paid it no investment management fees.

That does not, by itself, resolve whether the trustees’ conduct complied with fiduciary requirements.

But it does raise a legitimate question of investigative priorities.

Why did a proposal that attracted no investment capital receive such intense scrutiny while enormous existing private-market allocations and their underlying fees remained much harder for beneficiaries to examine?

Acton’s administration should request a transparent accounting of the evidence, costs and outcomes of prior pension investigations, while respecting the independence of the Attorney General and courts.

Ohio needs the same investigative intensity applied to billions in existing Wall Street investments that it applied to the people questioning those investments.

Ohio’s Data Center Money Machine May Be the Next Major Pension Problem

One of my most important Ohio investigations concerned the rapidly expanding data center economy:

Ohio’s Data-Center Money Machine: Husted, Ramaswamy, Faber, SFOF and Wall Street

Data centers bring together several risks that are usually examined separately:

Private equity.

Private credit.

Real estate.

Energy infrastructure.

Electricity rates.

Water consumption.

Tax incentives.

Cryptocurrency.

Political contributions.

Public pensions.

These risks can overlap in ways that conventional pension reporting does not reveal.

For example, Ohio teachers may own publicly traded shares of major technology companies driving artificial intelligence demand.

Their pension funds may simultaneously invest in private equity and infrastructure partnerships financing data centers, electricity generation, transmission facilities and other supporting businesses.

That does not prove that any particular private investment is imprudent.

But it creates the potential for concentrated economic exposure across investments that appear diversified on a pension asset-allocation report.

STRS reported approximately $103 billion in investments as of June 30, 2025, including substantial allocations to alternative investments and real estate.

Those allocations are not equivalent to data center exposure. The precise look-through exposure remains a question requiring investigation.

Acton should require executive agencies to disclose their lawful records concerning data center incentives, electricity infrastructure commitments and public subsidies.

Her pension commission should then request corresponding investment information from STRS, OPERS and the other retirement systems.

The questions are straightforward.

Who owns the facilities?

Which pension funds are financing them?

Who receives the tax abatements?

Who pays for transmission upgrades?

Who pays for the water?

What happens if projected AI demand does not materialize?

What happens when a private credit loan must be refinanced at higher interest rates?

And what happens if a data center developer fails after the public has already paid for supporting infrastructure?

Ohio should also examine pension exposure to cryptocurrency exchanges, mining companies, digital-asset lenders and tokenized investment vehicles.

These are not merely technology questions.

They are questions about whether Ohio taxpayers and pension beneficiaries are financing overlapping layers of risk while Wall Street collects fees at every stage.

Are Ohio Teachers Financing the Privatization of Their Own Schools?

Another investigation illustrates why private equity transparency should extend beyond investment performance:

Ohio Teachers Are Financing the Destruction of Their Own Public Schools

Ohio teachers contribute to a retirement system that invests in private equity firms.

Some of those firms own companies providing outsourced educational services, including transportation, staffing, special education services and education technology.

The relationships I examined included firms such as Leonard Green, EQT and Vistria and businesses operating in education-related markets.

This creates a potential conflict between the economic interests of public school employees and the commercial incentives of some businesses financed through their retirement investments.

The mechanism is troubling.

Teachers contribute to STRS.

STRS invests in private equity.

Private equity owns companies selling services to school districts.

Those businesses may profit from outsourcing activities previously performed by public employees.

Taxpayers then pay the private contractors.

That does not establish that a specific STRS investment caused a teacher layoff, reduced wages or damaged an Ohio school district.

But it does justify an investigation into the underlying investments, school district contracts, labor effects and fees.

An independent pension commission should examine whether the retirement systems adequately consider such financially material risks and conflicts when investing in businesses whose commercial strategies intersect with the public services their beneficiaries provide.

What Acton Can Actually Do Without the Legislature

Ohio’s pension systems are independent statutory entities.

Governor Acton cannot simply order their trustees to surrender every private equity contract, rewrite compensation policies, remove investment managers or create new private rights of action.

Those actions may require legislation or the exercise of existing authority by the appropriate pension boards and oversight officials.

But she can act.

I recommend an executive order establishing an Ohio Public Pension Transparency and Investment Risk Advisory Commission within her first 30 days.

The commission should include independent forensic accountants, pension investment specialists, retirees, public-records experts and individuals with experience examining private-market valuations.

It should have no financial ties to the managers or consultants under examination.

Its mandate should include:

1. A forensic review of STRS performance calculations and investment-staff bonuses, including the Mendenhall–Sutter findings.
2. An examination of GGA and other pension consultant compensation and conflicts.
3. A complete requested accounting of private equity and private credit fees, carried interest, underlying holdings and valuation practices.
4. A review of Apollo and other major investment managers’ due diligence, economic terms and material conflicts.
5. An investigation of direct and indirect pension exposure to data centers, cryptocurrency and related infrastructure.
6. An examination of pension investments in companies contracting with Ohio public schools.
7. A public report on political contributions, placement agents, lobbying and pension-related charitable payments, using legally obtainable information.
8. Recommendations for a permanent independent pension Inspector General and enforceable transparency legislation.

The governor can direct agencies under her authority to cooperate within the limits of law.

She can request participation by the pension systems.

The First 180 Days: A Test of Acton’s Commitment

Days 1–30: Establish the independent commission, adopt strict conflict-of-interest standards and formally request cooperation from the five statewide pension systems.

Days 31–90: Examine the STRS performance and bonus controversy, GGA’s work, existing private equity fee reports, Apollo investment records, and available data center and cryptocurrency exposure information.

Days 91–180: Publish an independent report identifying documented findings, disputed claims, unavailable records, potential conflicts, and recommended statutory changes.

The commission should make its methodology public.

Every significant finding should identify the evidence supporting it.

Pension managers and officials should have an opportunity to respond.

And the commission should not allow another layer of expensive consultants to substitute for independent verification.

Ramaswamy Is Out. The Wall Street Pension Machine Is Still There.

Ohio voters have changed the governor.

They have not automatically changed the pension investment managers, consultants, private equity partnerships, compensation systems or financial relationships that have accumulated over decades.

The STRS bonus controversy remains.

The questions about private-market valuations remain.

The Apollo due diligence questions remain.

The data center and cryptocurrency risks remain.

And the teachers and retirees whose money finances this enormous investment system still deserve more complete information.

I have spent much of 2026 documenting these problems, often finding the same pattern:

Private investment managers collect fees. Consultants validate complicated investment and compensation arrangements. Pension executives receive substantial bonuses. Political networks attract money. And beneficiaries struggle to obtain the information necessary to determine whether the system is working for them.

That pattern is an investigative thesis, not a finding that every institution or individual involved has engaged in misconduct.

But it is more than enough reason for a serious independent inquiry.

Amy Acton has an opportunity to make Ohio a national leader in public pension accountability.

She cannot accomplish every reform by executive order.

She can, however, initiate a credible investigation, mobilize existing oversight authorities, demand explanations and put the evidence before the public.

Ramaswamy lost the election. Now Acton should investigate the pension and Wall Street money machine that will continue operating long after the campaign signs disappear.

Ohio’s teachers, retirees and taxpayers have waited long enough.

---

Christopher B. Tobe, CFA, CAIA is an investment consultant, pension researcher, author of Kentucky Fried Pensions, and co-author with Edward Siedle of a 2025 investigation into CalPERS. His work focuses on fiduciary accountability, public pension governance, investment transparency and private-market investment risks.

By Christopher B. Tobe, CFA, CAIA

Fred Reish and Chris Heye identify a real retirement problem in their Summer 2026 Journal of Pension Benefits article, “The Importance of Annuities for Retired Workers: Why 401(k) Plans Should Include Guaranteed Income.” Retirees need dependable income, and managing investments and withdrawals can become harder with age.

But identifying a problem does not establish that the insurance industry’s preferred solution is the best answer. The article explains the risks of managing retirement savings far more fully than the risks of handing those savings to an insurance company.

Its omissions matter because a product that simplifies monthly cash flow can simultaneously introduce insurer credit risk, opaque pricing, contractual restrictions, and conflicts of interest.

“Guaranteed” by whom?

A general-account annuity replaces some investment and longevity risks with a contractual promise from an insurer. The policyholder owns contractual rights, rather than direct ownership of the insurer’s underlying investment portfolio.

The insurer may hold thousands of investments. That does not mean the retiree has thousands of independently enforceable promises. The retiree’s claim remains against the issuing company.

Other annuity structures can hold assets in separate accounts or diversify guarantees among insurers. Those differences deserve analysis. Treating “annuities” as a single solution conceals precisely the distinctions a fiduciary needs to understand.

The article gives no meaningful examination of what happens if the insurer weakens, what backs the promise, or what protection the participant actually has.

Cognitive decline strengthens the case for safeguards

Reish and Heye devote considerable attention to cognitive decline. Their concern is legitimate. Their policy conclusion is incomplete.

Someone who may struggle to rebalance a portfolio may also struggle to evaluate an annuity contract, compare payout options, recognize a deteriorating insurer, or understand what happens after a rollover.

The answer cannot be merely to educate participants about the advantages of annuities. Education must explain the disadvantages with equal clarity.

A monthly payment can simplify budgeting. It does not prevent a scammer from stealing money after it reaches the retiree’s bank account. Nor does it establish that a complex insurance purchase was suitable in the first place.

If diminished capacity justifies stronger intervention by plan fiduciaries, it also justifies stronger protections against inappropriate insurance products.

Where is the downgrade clause?

The article recommends commitments that can last for decades without discussing a basic contractual protection: what happens when the insurer no longer meets the financial-strength standard that justified its selection?

If a committee selected an insurer because it was AA-rated, what remedy does the participant have after serious deterioration?

In [Lifetime Income Annuities Need Downgrade Clauses to Work in 401(k)s](https://commonsense401kproject.com/2026/08/12/lifetime-income-annuities-need-downgrade-clauses-to-work-in-401ks/), I argued for enforceable transfer or replacement rights after specified credit deterioration.

That is a proposed protection, not a universal requirement of current law. It would need to be negotiated, priced, and funded. Replacing an already-annuitized payment obligation is more difficult than moving an investment account, and a promise to find a replacement insurer is not enough.

A workable contract must identify the trigger, the replacement mechanism, who bears the cost, and what happens when several insurers weaken together.

Those difficulties are reasons to address the issue before purchase. They are not reasons to omit it.

The costs do not disappear because there is no expense ratio

The article provides no meaningful account of annuity pricing.

Depending on the product, compensation can appear through explicit charges, commissions, embedded spreads, guarantee fees, or the terms of the payout itself. An apparently fee-free contract may still be expensive.

An insurer’s entire investment spread is not pure profit or a mutual-fund-style expense ratio. It also funds insurance risks, capital, administration, and other costs. But that is an argument for explaining the economics, not leaving them invisible.

Fiduciaries should demand competing quotes on comparable terms: the same premium, age, commencement date, survivor protection, refund features, inflation treatment, and credit quality. A payout percentage is not an investment return; it can include repayment of the participant’s own principal.

As I argued in [DOL’s Biggest Blind Spot](https://commonsense401kproject.com/2026/07/20/dols-biggest-blind-spot-404a5-fee-disclosures-ignore-annuities-the-largest-fees-in-many-401k-plans/) and [Annuities Break ERISA’s Disclosure Rules](https://commonsense401kproject.com/2026/06/24/annuities-break-erisas-disclosure-rules/), a disclosure system that leaves material insurance economics obscure makes comparison harder.

The safe-harbor discussion leaves out a crucial statutory requirement

The article describes the SECURE Act insurer-selection safe harbor as obtaining specified insurer information for fiduciary protection, then associates cost review with the separate regulatory safe harbor.

That presentation is materially incomplete.

[ERISA section 404(e)(1)(B)(ii) and (C)(ii)](https://www.law.cornell.edu/uscode/text/29/1104) also require consideration of contract costs, including fees and commissions, and a conclusion that the relative cost is reasonable in relation to the benefits and services. Insurer representations address specified financial-capability considerations; they do not replace the entire selection process.

More fundamentally, protection for a selecting fiduciary does not supply additional capital to the insurer or improve a retiree’s contractual recovery after failure.

A safe harbor for the buyer is not a guarantee for the beneficiary.

Outsourcing selection does not eliminate oversight

The article also points to DOL Advisory Opinion 2025-04A as a way to shift annuity-selection responsibility to an investment manager.

But the [opinion](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2025-04a) retains the appointing fiduciary’s responsibility to prudently select and monitor that manager, and preserves potential co-fiduciary liability.

The opinion also describes features that deserve more attention: multiple insurers, quarterly competitive bidding, and continuing insurer review. These are representations about the particular program, not DOL factual findings or a blanket endorsement of annuities.

If fiduciary expertise is outsourced, the committee still needs to understand the manager’s incentives, methods, compensation, and conflicts.

Where are the prohibited-transaction questions?

The article does not examine whether an insurer, recordkeeper, adviser, or affiliate is a party in interest, or how compensation moves among them.

An insurer recordkeeper recommending its own annuity presents a different conflict from an independent adviser evaluating competing providers. Proprietary products, affiliated services, commissions, and platform payments deserve scrutiny.

As I argued in [Annuities as Prohibited Transactions in Retirement Plans](https://commonsense401kproject.com/2026/03/01/annuities-as-prohibited-transactions-in-retirement-plans/), fiduciaries need a separate analysis of the transaction and any applicable exemption.

Not every annuity purchase is automatically unlawful. But an insurer-selection safe harbor is not itself a prohibited-transaction exemption. Fiduciaries should identify the exemption they rely on and document compliance with its conditions.

State regulation is part of the product

A decades-long insurance promise cannot be evaluated without examining the system supervising it.

Which legal entity issued the contract? Where is it domiciled? How much risk has been reinsured, to whom, and under which jurisdiction? What affiliated investments, private-credit exposures, or valuation assumptions support the promise?

These are the questions behind my pieces on [who regulates the annuity](https://commonsense401kproject.com/2026/08/10/annuities-who-is-your-regulator-and-does-your-401k-fiduciary-even-know/), [regulatory shopping](https://commonsense401kproject.com/2026/07/21/annuities-cherry-pick-the-weakest-state-regulator/), and [New York versus Iowa](https://commonsense401kproject.com/2026/08/11/new-york-vs-iowa-annuities-where-does-the-extra-spread-come-from/).

A higher quoted benefit does not establish superior value if the difference reflects additional risk or weaker protection. Conversely, domicile alone does not prove a particular insurer is unsafe. The committee needs evidence.

State guaranty-association protection also requires contract-specific analysis. Coverage depends on governing law and eligibility rules; it should never be presented as an unlimited federal backstop.

That is why I support [a federal insurance watchdog](https://commonsense401kproject.com/2026/09/25/congress-finally-asks-whether-america-needs-a-federal-insurance-regulator-the-answer-is-yes/) with authority to examine financial groups, affiliated transactions, reinsurance, capital, and liquidity before retirees lose access to their money.

A regular payment is not necessarily an adequate payment

The article invokes healthcare and long-term-care expenses without adequately examining inflation or emergency liquidity.

At 3% annual inflation, a fixed payment loses approximately 45% of its purchasing power over 20 years. An income check that continues for life can still become inadequate.

An annuity can help pay care bills. It does not, simply by producing income, insure the cost of long-term care. An unexpected large expense may require liquid assets precisely when an annuitized premium is unavailable.

Fiduciaries must also examine survivor benefits, early-death outcomes, portability, and any loss of guarantees when participants change employers or move their accounts.

Compare alternatives before declaring the solution

The article moves too quickly from the need for retirement income to the need for annuities.

Automatic withdrawals, diversified low-cost portfolios, bond or TIPS ladders, and strategies that coordinate withdrawals with Social Security deserve comparison. These alternatives do not all insure against extreme longevity. Annuities do not solve every liquidity, inflation, or credit problem either.

Likewise, diversified synthetic stable value may provide a useful comparison for capital-preservation money, as I discussed in [my stable-value critique](https://commonsense401kproject.com/2026/03/11/stable-value-industry-admits-synthetic-funds-are-safer-and-why-that-makes-general-account-annuities-a-prohibited-transaction/). It is not a substitute for lifetime mortality pooling.

The fiduciary task is to identify the need and compare the available ways to meet it. As I argued in [Lifetime Income: The Gateway Drug for Insurance Products in 401(k) Plans](https://commonsense401kproject.com/2026/06/09/lifetime-income-the-gateway-drug-for-insurance-products-in-401k-plans/), endorsing retirement income should not become automatic approval of the insurance products marketed under that label.

Reish and Heye make a persuasive case that retirees need help. Their article does not establish that the annuity products offered to them provide that help at a reasonable cost, with adequate transparency and enforceable protections.

Before a fiduciary asks an aging participant to trust a lifetime guarantee, the fiduciary should be able to explain who stands behind it, what it costs, what can go wrong, and what the participant can do when the promise weakens.

BlackRock’s new survey of insurers representing more than $24 trillion in assets shows that 76% plan to increase private-market investments. Coming one week after Wharton’s alarming research on private-equity-owned insurers, the findings raise a bigger question: Who is measuring the risks being transferred to America’s annuity holders and pensioners?

Chris Tobe, CFA, CAIA The CommonSense 401k Project | October 27, 2026

BlackRock Just Confirmed What Wharton Warned About

Last week, I wrote about an important new Wharton research paper documenting how private-equity-owned insurance companies were increasing risks through affiliated investments, private credit, and structured securities.

My article from last week, “Wharton Exposes the Private Equity Insurance Risk Machine — And Why the Entire Annuity Industry May Be Forced to Follow,”, warned that traditional insurance companies would face competitive pressure to adopt similar investment strategies.

Now BlackRock has released its 2026 Global Insurance Report, and the results suggest this transformation is already well underway.

BlackRock surveyed 463 senior insurance executives across 31 markets, representing more than $24 trillion in investable insurance assets.

The findings are extraordinary.

BlackRock’s findings	2026 results
Insurers planning to increase private-market allocations	76%
Insurers already investing at least 5% in private markets	92%
Insurers investing more than 15% in private markets	Over 40%
Insurers prioritizing increased private-debt allocations	41%
Insurers using internal and external asset management	84%
Insurers planning greater use of external asset managers	49%
Insurers reporting external partnerships across two or more business functions	82%

Source: BlackRock, 2026 Global Insurance Survey, released October 27, 2026.

These are survey responses, not independently verified portfolio-level risk measurements. They do not establish that 76% of insurers are taking imprudent risks.

But they show that private markets have moved from a specialized investment strategy to a mainstream component of insurance balance sheets.

Private equity no longer needs to own an insurance company to influence how that insurer invests its policyholders’ money.

That should concern everyone depending on fixed annuities, pension risk transfer annuities, or other long-term insurance guarantees.

The Most Disturbing Finding: 76% Want More Private Markets, but 82% Say They Are Not Increasing Risk

BlackRock reports that 82% of insurers plan to maintain their overall investment-risk profile.

At the same time, 76% plan to increase their private-market allocations.

How can both be true?

There are legitimate explanations. An insurer might reduce other exposures, diversify its investments, or purchase private assets with genuinely strong credit protection.

But the apparent contradiction also exposes a major problem with insurance risk measurement.

Private credit can appear less volatile than publicly traded bonds because it is not priced continuously in an active market.

A publicly traded corporate bond may decline sharply in market value when credit spreads widen.

A privately originated loan may continue to appear on an insurer’s books at or near its adjusted carrying value, even when selling it would require a substantial discount.

The absence of a daily market price does not eliminate the economic loss.

It may simply delay its recognition.

When you stop measuring market volatility, you have not eliminated risk. You may have eliminated the evidence of risk.

That is especially dangerous when insurers use historical volatility, accounting valuations, or favorable private ratings to justify increased allocations to illiquid investments.

The BlackRock survey does not prove that insurers are understating risk. But it makes independent verification more important.

Wharton Found the Hidden Risk. BlackRock Shows How Broadly Private Markets Have Spread.

The two studies should be read together.

The September 2026 Wharton paper, Buying from the Family: Private Equity-Owned Insurers and Their Affiliated Investments, by Amy W. Huber, Stefan Huber, Bella Shan, and Christina Zhu, examined how private-equity-owned insurers invest in securities issued by affiliated businesses.

The researchers found that PE-owned insurers were more likely to purchase affiliated structured securities, sometimes paid higher prices for them, and were less inclined to recognize impairment or sell deteriorating affiliated investments.

Their analysis of NAIC stress-test results was especially alarming.

Under a severe scenario broadly comparable to the 2008 financial crisis, the researchers estimated that affiliated structured-credit exposure could generate approximately four additional percentage points of losses across PE-owned insurers’ fixed-income portfolios.

That compares with an average equity buffer of 7.6% of fixed-income investments.

In other words, the additional modeled losses alone could consume more than half that measured buffer.

The calculation involves extrapolating stress-test results from broadly syndicated CLOs to other structured securities, so it is an estimate rather than a prediction of insurer insolvency.

Nevertheless, it demonstrates why the apparent stability of private-credit investments during normal conditions may be misleading.

BlackRock now supplies the broader industry context.

Its survey shows that private markets are no longer confined to insurers controlled by private-equity firms.

Traditional insurers increasingly invest through external asset managers, separate accounts, and customized mandates.

The risk identified by Wharton is not necessarily identical across these arrangements. An independent insurer hiring a private-credit manager does not automatically have the same conflicts as an insurer buying securities from an affiliated issuer.

But the expansion raises common questions about valuation, liquidity, capital requirements, and who ultimately controls investment decisions.

Wharton documented a specific mechanism of risk. BlackRock demonstrates the enormous scale of the industry’s movement into private assets.

Together, they make a compelling case for federal scrutiny.

The Insurance Industry Is Becoming a Private-Credit Financing Machine

BlackRock reports that 84% of surveyed insurers use a hybrid investment-management model, combining internal capabilities with outside managers.

Nearly half expect to increase their reliance on external asset management.

Even more revealing, 82% report external partnerships covering at least two business functions, including investments, capital, liability and product design, or distribution.

BlackRock describes this evolution as a more modular insurance industry.

That sounds efficient.

But from a regulatory perspective, it raises an important question:

When an insurer depends on a network of outside asset managers, reinsurers, investment originators, and affiliated financial entities, who is responsible for evaluating the risks of the entire arrangement?

Consider a hypothetical insurer that purchases private-credit securities originated by an outside asset manager.

The securities are privately rated.

The underlying loans are held through investment vehicles.

The insurer reports the investments at statutory carrying values.

The asset manager earns fees for originating and managing the loans.

The insurer receives the yield, assumes the investment risk, and promises to pay annuity holders for decades.

This arrangement may be perfectly legitimate.

But it can also create conflicts when the asset manager benefits from placing loans with an insurer regardless of whether those loans represent the best available investments for policyholders.

The potential conflicts become more serious when ownership, financing, reinsurance, or other business relationships connect the participants.

Wharton’s findings show why affiliated transactions deserve special scrutiny.

BlackRock’s findings show why regulators also need to examine the increasingly complex relationships between nominally independent insurers and their investment partners.

A 15-Year Private Mortgage Does Not Become Safe Because Its Interest Rate Resets Every Three Months

One of the biggest weaknesses in insurance asset/liability analysis is the distinction between interest-rate duration and actual liquidity.

Consider a private commercial mortgage with a 15-year maturity and an interest rate that resets quarterly.

Its sensitivity to changes in benchmark interest rates may be relatively low.

But its principal remains exposed to the borrower for 15 years unless it is prepaid or refinanced.

If commercial real estate values decline, the borrower encounters financial difficulty, or refinancing becomes unavailable, the insurer may face a substantial loss.

And if the insurer needs cash immediately, selling the mortgage may require a large discount.

A three-month rate reset does not produce a three-month investment.

It does not guarantee repayment of principal.

It does not guarantee market liquidity.

It does not eliminate credit-spread risk.

Yet insurers can present portfolios with relatively short interest-rate duration and favorable credit ratings without providing enough information about the underlying contractual maturities and stressed liquidation values.

This is especially important for general-account fixed annuities.

A retirement plan may hold an institutional fixed annuity for 20 or 30 years without a fixed contractual maturity date.

The insurer may model the expected liability duration at a substantially shorter period based on participant withdrawals and expected plan behavior.

Meanwhile, the supporting assets may include privately originated loans with contractual maturities extending well beyond their apparent interest-rate duration.

The question is not simply whether the insurer’s reported asset duration matches its modeled liability duration.

The question is whether the insurer can produce cash when it needs to pay policyholders during a severe credit crisis.

That requires an entirely different level of disclosure.

BlackRock’s Own Business Interests Deserve Scrutiny

BlackRock is not a neutral academic observer.

It is one of the world’s largest asset managers and an increasingly important participant in private markets, including through its acquisition of HPS Investment Partners.

It has a commercial interest in providing investment-management services to insurance companies.

That does not invalidate its survey. The findings are valuable precisely because they reflect what insurance executives say they intend to do.

But it should affect how regulators interpret the industry’s enthusiasm for private markets.

Asset managers benefit when insurers allocate more capital to investment products and mandates they manage.

Insurers may benefit from higher expected yields.

Insurance executives may benefit from improved reported profitability and competitiveness.

The annuity holder, however, does not necessarily receive a proportional share of those benefits.

In a traditional general-account fixed annuity, the insurer typically retains the difference between its investment earnings and the crediting rate promised to policyholders, after expenses and other costs.

When investment yields increase, the insurer may retain some or much of the additional spread.

But if those higher yields reflect greater credit, liquidity, or valuation risk, policyholders remain exposed to the insurer’s ability to honor its guarantees.

This creates an obvious question:

Are insurance companies increasing private-credit exposure to improve retirement security, or to increase the investment spread retained by insurers and their financial partners?

That question deserves far more scrutiny than it receives.

The Race to the Bottom May Already Be Underway

My Wharton based article argued that private-equity-owned insurers could create competitive pressure on traditional insurance companies.

The logic is straightforward.

If one insurer can offer attractive annuity rates or lower pension risk transfer premiums because it invests in higher-yielding private credit, competing insurers may face pressure to increase their own portfolio yields.

They can accept lower profits, lose business, or pursue similar investments.

BlackRock’s survey suggests that private-market investing is now widely embedded in insurers’ strategies.

It does not prove that competition has forced every insurer to take more risk.

But it supports the concern that the industry is moving in a common direction, even while individual insurers differ in their investment policies.

This matters enormously for pension risk transfers.

A pension sponsor shopping for an annuity may prefer the insurer offering the lowest premium.

A lower premium can leave more assets available for the sponsor or reduce the cost of terminating the pension obligation.

But if the lower price is made possible by assuming greater private-credit risk, pensioners may bear consequences that are not reflected in the initial transaction price.

Under a pension risk transfer, retirees typically lose the protection of the PBGC for transferred benefits and instead depend on the insurer’s contractual promise and applicable state guaranty protections.

That makes the insurer’s investment portfolio a critical component of retirement security.

A fiduciary cannot adequately evaluate that promise merely by reviewing a financial-strength rating.

The insurer’s private-credit concentration, asset-manager relationships, liquidity, and stress-test results are equally relevant.

Remember AIG: Ratings Do Not Prevent Liquidity Crises

The insurance industry has been here before.

AIG held an AAA credit rating in early 2005.

By September 2008, following successive downgrades, it was rated A− and required an emergency $85 billion Federal Reserve rescue.

AIG’s problems included mortgage-related securities, derivatives collateral requirements, securities lending, and the inability to raise cash when confidence disappeared.

The crisis did not require every regulated insurance subsidiary to become legally insolvent.

Liquidity demands at the broader financial group became overwhelming before a formal bankruptcy.

The comparison with today’s private-credit insurers is not exact.

AIG’s derivatives and securities-lending exposures differed from the private-credit investments highlighted by Wharton and BlackRock.

But the underlying lesson remains important.

A highly rated financial institution can become a systemic threat when deteriorating assets, leverage, credit downgrades, and liquidity demands reinforce one another.

BlackRock reports that 61% of surveyed insurers expect a soft landing for the global economy over the next year.

Only 18% identify recession as a leading macroeconomic concern, down from 35% in 2025.

That optimism may prove justified.

But retirement security should not depend on the majority of insurance executives correctly forecasting the next recession.

The entire purpose of capital requirements and insurance regulation is to ensure that promises survive when optimistic assumptions prove wrong.

Why Fixed Annuities Need Downgrade Clauses

In my article “Annuity Derisking in Retirement Plans,”, I argued that retirement plans should demand stronger protections against insurer credit deterioration.

A general-account fixed annuity exposes participants to the financial strength of one insurer.

The insurer may own thousands of investments, but the participant generally owns a contractual claim against that insurer rather than a diversified interest in the underlying assets.

One protection is an enforceable downgrade clause permitting the retirement plan to exit at book value if the insurer’s financial strength deteriorates.

Insurers may resist such provisions because they create liquidity obligations at precisely the time the insurer could be under financial stress.

That resistance demonstrates why the provisions can be valuable.

But downgrade clauses must be supported by appropriate capital and liquidity requirements. A contractual promise is only useful if the insurer can honor it.

For PRT annuities, comparable protection could involve additional collateral, security arrangements, or replacement-insurer mechanisms rather than simply allowing pensioners to surrender lifetime benefits.

Congress should require fiduciaries to evaluate these protections through competitive bidding and require insurers to disclose their cost.

The value of protection should not be ignored merely because insurers prefer contracts without it.

The NAIC Cannot Regulate This Problem Adequately by Itself

The United States continues to rely primarily on state insurance regulation, coordinated through the National Association of Insurance Commissioners.

The NAIC develops important model laws, valuation rules, and risk-based capital standards.

But it is not a federal regulator with direct nationwide enforcement authority over every insurance company and financial conglomerate.

Meanwhile, the investments supporting American annuities can pass through asset managers, reinsurers, offshore entities, and privately structured investment vehicles operating across multiple jurisdictions.

The financial risks are national and increasingly global.

The regulatory system remains fragmented.

In my September 25 article, “Congress Finally Asks Whether America Needs a Federal Insurance Regulator? The Answer Is Yes,”, I argued that the United States needs meaningful federal insurance oversight.

BlackRock’s survey makes that argument more urgent.

If insurers representing trillions of dollars are increasingly dependent on private markets and external financial partners, regulators need the authority to examine those relationships across the entire corporate structure.

They need to know who originated the investments, who rated them, who values them, who receives the fees, where the assets are legally held, and what happens when the insurer needs cash.

And they need to be able to intervene before a financial crisis exposes risks that statutory accounting failed to reveal.

Congress Should Require Seven Reforms

1. Full disclosure of private-credit investments. Insurers should report private-credit exposures by asset class, contractual maturity, interest-rate duration, credit-spread sensitivity, valuation methodology, rating provider, and liquidity.

2. Independent valuation and rating scrutiny. Privately rated securities and affiliated investments should face independent review, particularly when their favorable ratings reduce statutory capital requirements.

3. Federal insurance liquidity stress tests. Regulators should test simultaneous private-credit defaults, declining recovery rates, credit-spread widening, downgrades, and forced asset sales. The tests should examine both capital adequacy and actual cash availability.

4. Transparency across affiliated and external investment managers. Insurers should disclose ownership relationships, investment-management fees, affiliated transactions, reinsurance arrangements, and material conflicts of interest.

5. Offshore investment transparency. Federal reporting should trace retirement assets through Bermuda, Cayman, Luxembourg, Delaware, and other investment structures to their ultimate economic exposures.

6. Stronger retirement-annuity protections. ERISA fiduciaries should obtain meaningful information about insurer credit and liquidity risk, and evaluate downgrade provisions or equivalent security protections before committing participant benefits to an insurer.

7. A federal insurance regulator with real authority. Congress should establish a federal agency capable of supervising systemic insurance risks, requiring standardized disclosures, examining financial groups, and enforcing capital and liquidity standards across state and international boundaries.

These reforms would not prohibit prudent private-credit investing.

They would require insurers to demonstrate that their assets, capital, and liquidity are adequate to support the promises they have made.

That should not be controversial.

The BlackRock Warning Is Bigger Than BlackRock Intended

BlackRock presents its survey as evidence that private markets have become a mature and strategic component of insurance investment portfolios.

That may be how the asset-management industry sees it.

I see something more troubling.

Wharton has documented how affiliated private-credit investing can weaken investment discipline and magnify losses under severe stress.

BlackRock now confirms that private-market exposure is widespread and that insurers are increasingly relying on external financial partners to manage their assets and businesses.

Together, these findings suggest that the risks associated with private credit can no longer be treated as a specialized problem involving a few private-equity-owned insurance companies.

The issue is potentially much larger.

The entire insurance industry is becoming more connected to private-credit markets, asset managers, and complex financial structures.

And the people who ultimately depend on insurance promises—retirees, pensioners, and annuity holders—may have little understanding of those risks.

The industry’s response will be that the investments are diversified, investment grade, professionally managed, and appropriately capitalized.

Those assurances are not enough.

A privately rated AA security is not the same as cash.

A floating-rate 15-year mortgage is not a short-term liquid investment.

An investment carried at book value is not necessarily worth that amount in a distressed sale.

And an insurance company with adequate reported statutory capital is not necessarily prepared for simultaneous credit losses and liquidity demands.

BlackRock reports that 74% of respondents plan to access private debt through separate accounts or bespoke mandates. That reinforces the need for asset-level transparency and scrutiny of insurer–asset-manager relationships, even when the insurer is not PE-owned.

BlackRock has confirmed the scale of the industry’s private-market expansion. Wharton has demonstrated some of the hidden dangers. AIG demonstrated what can happen when financial risks and liquidity demands overwhelm even a highly rated institution.

Congress should connect the dots.

America needs federal insurance regulation before the next private-credit crisis—not another taxpayer rescue afterward.

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Research and related reading

• BlackRock, 2026 Global Insurance Report, October 27, 2026.
• Financial Times, “Insurers bullish on private markets even as government bond yields rise”, October 27, 2026.
• CommonSense 401k Project, “Wharton Exposes the Private Equity Insurance Risk Machine”, October 20, 2026.
• CommonSense 401k Project, “Offshore in Your 401(k): Congress Must Require Wall Street to Show the Entire Chain”, October 15, 2026.
• CommonSense 401k Project, “Congress Finally Asks Whether America Needs a Federal Insurance Regulator”, September 25, 2026.

By Christopher B. Tobe

My wife and I are parents of an autistic daughter. Medicaid waiver services are an essential part of how we meet her needs and plan for her future.

When Washington debates Medicaid, we hear something more concrete than competing budget numbers. We hear questions about whether families can find caregivers, whether community services will remain available, and whether adults who need substantial support will have somewhere safe to live when their parents can no longer care for them.

Kentucky’s Senate candidates, Andy Barr and Charles Booker, should be judged on how their policies answer those questions.

The record shows a clear difference. On July 3, 2025, Barr voted for final House passage of the One Big Beautiful Bill Act, which President Trump signed the following day. Booker’s campaign explicitly calls for reversing the law’s Medicaid cuts. One candidate helped enact the changes; the other promises to reverse them.

Voters deserve to understand what that difference means.

KFF reports that the Congressional Budget Office estimated the legislation would reduce federal Medicaid spending by approximately $911 billion over 2025–2034 compared with the previous legal baseline. This is a substantial withdrawal of federal support relative to what otherwise would have been provided.

Barr has defended the legislation as protecting Medicaid against fraud, waste, and abuse. He has also argued that Medicaid spending will continue growing over the next decade.

Spending can rise in dollars while falling substantially below the amount projected under prior law. Population needs, medical costs, and caregiver wages do not stop increasing because Congress changes a funding formula. A growing national spending total does not establish that Kentucky will have sufficient resources to sustain access to care.

The relevant question is whether people can actually obtain the services they need.

That matters especially for home and community-based services. Most of these services are optional under federal Medicaid law, and states can limit waiver enrollment and spending. KFF warns that federal funding reductions could lead states to serve fewer people, reduce benefits, or lower provider payments.

“Optional” is a budget classification. For a family depending on personal care, respite, behavioral support, or residential assistance, these services can be indispensable.

Nor does an exemption from work requirements settle the issue. Kentucky says the requirements beginning January 1, 2027, apply principally to Medicaid expansion adults, with exemptions including people with disabilities and qualifying caregivers. Those protections matter. They do not guarantee adequate funding for waiver services or an available caregiver.

Kentucky has already demonstrated how fragile this system can be. In July, Governor Andy Beshear announced that unexpected revenue would prevent a planned 4% Medicaid provider fee schedule reduction and address underfunding of existing Michelle P. waiver slots. That was a separate state budget dispute, and it should be described accurately. It also showed that maintaining services requires actual money and deliberate policy choices.

Booker’s commitment to reverse the federal Medicaid cuts addresses that funding problem more directly than assurances that the program remains protected.

Kentucky’s next senator must also recognize the connection between family caregiving and the broader economy. When reliable support disappears, someone must fill the gap. Often that means a parent reducing work, leaving employment, or postponing retirement. The need remains even when public funding retreats.

For my family, planning for our daughter’s future requires services we can depend on over many years. Kentucky deserves a senator prepared to make that same long-term commitment—and willing to be held accountable for delivering it.    Charles Booker is that Senator.

Massie deserves credit for challenging his own party’s leadership and helping force disclosure of the Epstein files. His defeat should never become permission for Washington to abandon the investigation or protect powerful people from scrutiny.

Melissa Strange has made her position explicit. Her campaign platform calls for releasing the Epstein files and prosecuting perpetrators. She also supports restrictions on congressional stock trading, a ban on members becoming lobbyists, and campaign finance reform. These are public commitments voters can use to hold her accountable.

Her Republican opponent, Ed Gallrein, benefited from an outside spending operation that has strong connections to Jeffrey Epstein and Israel.

In the primary Gallrein received from  Paul Singer via MAGA KY $3 million.   Singer is a major pro-Israel financier who helped fund the operation against Massie, and he is mentioned in Epstein records.  His oil company CITGO was a major beneficiary of the Venezuela operation.

Miriam Adelson a joint citizen of US and Israel gave $750,000 to MAGA KY.   Both Miriam and her late husband Sheldon Adelson are mentioned in Epstein-related materials.

Hedge Funder John Paulson was a major $410,000 Gallrein doner in primary.   Massie publicly challenged Paulson’s appearance in Epstein’s address book, and subsequently released records that show Epstein emailed Paulson about a $50,000 donation to a dinner honoring Howard Lutnick.

Trump Secretary of Commerce Howard Lutnick contributed approximately $8.75 million to MAGA Inc. during the 2024 cycle. ABC News subsequently reported his acknowledgment of a 2012 visit to Epstein’s island, years after the point at which he had previously said he would never again be in Epstein’s presence.

Ronald Lauder gave MAGA Inc. $5 million, according to Forbes’ review of federal filings. Bloomberg reported that Epstein coordinated a legal entity allowing Lauder and Apollo co-founder Leon Black to share ownership of a $25 million painting. That was a specific financial arrangement involving Epstein.

Schwarzman, Blackstone’s co-founder, contributed $400,000 appears in the Epstein records.

The survivors deserve an accounting of who enabled Epstein, how institutions failed them, and why accountability took so long. Kentuckians deserve a representative prepared to demand those answers even when influential people would prefer silence.

Melissa Strange has committed herself to Epstein disclosure and accountability. On that basis, she has my endorsement for Congress.

Chris Tobe is the Chair of Kentucky Epstein Justice