In the 6th District Congressional race, Republican Ralph Alvarado accuses Democrat Zach Denbo of taking Epstein-related donations from Reid Hoffman of LinkedIn. I applaud him for bringing out these facts. I think it is important to point out Alvarado’s far more serious Epstein ties.
No one has a more serious connection to Epstein than Apollo and its founder/CEO, Leon Black. From his conviction in 2008 to his death in 2019 Leon Black provided Epstein with over $158 million for “tax advice”, despite Epstein having no qualifications in that area. The Epstein Files contain over 8,000 mentions of Black. Current Apollo CEO Marc Rowan is also prominently featured in the Epstein files. Apollo-owned Lifepoint Health gave a $10,000 donation to Alvarado.
Alvarado received substantial funding from the MAGA Inc. Super PAC, whose donors include many Epstein buddies and those broadly in the Epstein Class. Howard Lutnick, current Commerce Secretary and Epstein neighbor, gave MAGA Inc. $8.75mm and lied about visiting Epstein Island in 2012, claiming he cut ties in 2005. Ron Lauder a $5mm donor to MAGA Inc. who is best known for pushing Trumps “Greenland” initiative but files show that Epstein helped him establish an entity for him and Leon Black to jointly purchase a valuable painting which got 961 mentions in the Epstein files. Stephen Schwatzman of Blackstone, another $5mm MAGA donor, has only 179 mentions in the Epstein file. Marc Rowan of Apollo gave $1mm to MAGA as well.
*By Chris Tobe, CFA, CAIA | The CommonSense 401k Project*
As Florida attorney general, Moody was one of just three trustees of the State Board of Administration, alongside the governor and chief financial officer. The Florida Retirement System Pension Plan held approximately $198 billion in June 2024, during her tenure. By June 2025, it held $211.5 billion.
New reporting from Drop Site News scrutinizes her office’s investigation into Jeffrey Epstein’s work-release arrangement and reports campaign contributions from people identified in Epstein-related records. The pension dimension makes the accountability question larger: some of the financial institutions connected to those records also had access to Florida workers’ retirement capital.
Apollo and Blackstone are the obvious starting points. They are not the end of the story.
Follow the pension relationships
The names extend to Carlyle cofounder David Rubenstein, Highbridge cofounder Glenn Dubin, Starwood founder Barry Sternlicht, former JPMorgan executive Jes Staley, JPMorgan asset and wealth management chief Mary Erdoes, KKR cofounder Henry Kravis, TPG cofounder David Bonderman, and Colony Capital founder Tom Barrack.
These connections differ. Some involve confirmed meetings, some extensive correspondence, some financial dealings, and some address-book entries.
The public deserves to know which managers received pension business, what trustees learned about their leadership, and how those facts affected investment oversight.
Carlyle: Rubenstein met Epstein after his conviction
David Rubenstein’s connection goes beyond a name appearing in somebody else’s conversation.
Released correspondence records a November 2012 meeting and an exchange afterward acknowledging it. Rubenstein’s spokesperson described a single, 20-minute meeting at Carlyle’s office about philanthropic proposals he did not pursue. The records also contain discussion of another possible meeting.
Florida’s pension report identifies Carlyle private equity, property, aviation and credit investments. One disclosed position alone—Carlyle Property Investors—was valued at approximately $363.4 million in June 2025.
A separate document, EFTA00665300, shows Boris Nikolic forwarding Epstein older fundraising correspondence headed “Materials at request of David Rubenstein.” It includes communications from Ryan Schwarz about a healthcare fund and its placement memorandum. That establishes that Carlyle-related materials reached Epstein through Nikolic.
The trustee question is straightforward: what did Florida examine about Carlyle’s leadership, controls and disclosures, and where is the written record?
Highbridge: Dubin adds a financial connection
Glenn Dubin cofounded Highbridge Capital Management. His relationship with Epstein involved both personal contact and financial dealings, including Epstein’s investments and reported involvement in Highbridge’s sale to JPMorgan.
Florida’s June 2025 report lists approximately $324.2 million in Highbridge Tactical Credit Fund and $25.6 million in Highbridge Convertible Dislocation Fund—roughly $349.8 million combined. Dubin left Highbridge in 2013.
Starwood: Sternlicht’s dinner was confirmed
Barry Sternlicht’s spokesperson confirmed that the Starwood founder attended an August 2018 dinner at Epstein’s Manhattan home—approximately a decade after Epstein’s conviction.
The spokesperson said Sternlicht attended at Peter Attia’s urging, wanted to meet Woody Allen and Kathryn Ruemmler, left early, and never subsequently saw or spoke to Epstein. A separate purported 2013 meeting was disputed.
Florida’s pension report lists several Starwood real estate funds.
JPMorgan: the governance issue has an established regulatory record
Jes Staley headed JPMorgan’s asset-management business from 2001 through 2009. Florida has a documented history of investing with JPMorgan, and its more recent report lists multiple JPMorgan property funds.
Staley’s Epstein relationship was extensive. The UK Upper Tribunal upheld his regulatory ban after he approved misleading statements about the nature and timing of that relationship.
That is a concrete finding about integrity in financial leadership. Pension trustees should care deeply about it.
Mary Erdoes also belongs in the examination. Reporting documents meetings with Epstein in 2011 and 2013. Other bankers identified in reporting include John Duffy and Justin Nelson. JPMorgan said the interactions involved ordinary client matters, litigation or client introductions, and denied knowledge of Epstein’s crimes.
Erdoes’s relevance to institutional investors is particularly direct because she leads asset and wealth management.
KKR, TPG and Colony broaden the inquiry
Henry Kravis appears in Epstein’s address book, according to William Cohan’s reporting. Florida reports investments in KKR Asian funds. That establishes an address-book overlap with the cofounder of a pension manager.
David Bonderman, TPG’s cofounder, appears in Epstein’s earlier address book, investigated by Business Insider. Florida reports TPG Growth fund holdings. Tom Barrack’s connection is more substantial. Released records document years of correspondence with Epstein after his conviction. Florida’s December 2016 schedule listed $375 million in commitments across three Colony distressed-credit funds. Its June 2024 schedule still reported approximately $44.9 million in combined remaining value in those funds.
California already demonstrated the danger of weak pension oversight
The CalPERS placement-agent scandal involved Apollo-managed investments, fraudulent disclosure letters and concealed financial relationships. Former CalPERS CEO Fred Buenrostro pleaded guilty and received a 54-month prison sentence. A Trustee committed suicide.
It is also highly likely that Florida used brokerage firm Cantor Fitzgerald owned by Howard Lutnick, but was not disclosed.
Ashley Moodys ties to the Epstein class disqualifies her for Senate.
Kentucky’s public pensions need a comprehensive investigation of excessive investment fees. They also need to make sure the investigation does not become another way for Wall Street to profit from pension secrecy. Especially putting this into the hands of Apollo with its extensive connections to Jeffrey Epstein.
I have publicly estimated that CERS and related pension plans administered by the Kentucky Public Pensions Authority are burdened with more than $200 million a year in excessive fees, primarily associated with private equity firms operating through secret, no-bid contracts.
Now CERS has hired XTP Implementation Services to examine investment contracts and share in the savings.
Recovering pension money sounds attractive. But the ownership relationships behind the investigator raise an unavoidable question:
Could Kentucky’s fee investigation become a tool for selectively pressuring some private equity firms while protecting others?
The public deserves an answer before a savings announcement becomes an excuse to stop asking questions.
The 50% bounty is real
In his September 14, 2026, report to the CERS board, CEO Ed Owens announced that CERS had finalized its agreement with XTP. The assignment includes reviewing existing investment manager and contractual service agreements for compliance. CERS and XTP will split savings equally for the first two years; subsequent savings belong entirely to the trust.
That is a substantial financial incentive.
For illustration, $20 million in qualifying savings during the sharing period would mean $10 million for XTP. Whether that price is reasonable depends on the work performed, the alternatives available, and precisely how “savings” are calculated.
The board memorandum establishes a two-year sharing period. It does not establish that the bounty continues forever. Nor does that summary tell us whether there is a dollar cap, how recoveries are distinguished from future discounts, or who independently verifies the calculation.
Publish the executed contract. Kentucky should not need another secret agreement to investigate the costs of existing secret agreements.
Follow the ownership chain
Wilshire acquired XTP in August 2024. Wilshire itself was acquired by CC Capital and Motive Partners in January 2021. Later in 2021, Apollo announced a strategic partnership that included acquiring up to a 24.9% minority interest in Motive’s management company and investing through Motive-managed vehicles.
Gretchen Morgenson’s May 2026 reporting on the CalPERS investigation highlighted the Apollo–Motive–Wilshire connection. My accompanying CalPERS analysis examined the broader history of Apollo’s relationship with the pension fund.
Kentucky trustees should demand a current ownership chart, economic-interest disclosures, and an explanation of every party’s governance and information rights.
“Independent” should describe enforceable protections, not simply appear in the sales presentation.
Selective scrutiny could turn oversight into a competitive weapon
Consider how this arrangement could be misused.
An investigator examines one private equity manager aggressively, demands extensive documentation, challenges expense allocations and presses for concessions. Another manager receives a narrower review. A third is deferred.
Even when all contracts are nominally within scope, the depth, timing and consequences of scrutiny can differ dramatically.
If Apollo competitors received aggressive treatment while Apollo-related interests received favorable treatment, Kentucky’s pension oversight could become a competitive weapon.
A targeted firm might face pressure to make concessions while a connected competitor preserved its economics. A few visible savings could then provide political cover for leaving much larger costs untouched.
Who decides which fees deserve a fight?
A percentage-of-savings arrangement rewards recoveries that qualify for compensation. It does not automatically reward a complete accounting of every excessive cost.
An investigator could pursue easy discounts, avoid difficult managers, and produce a profitable engagement without confronting the largest problems.
A pension board could announce millions saved while leaving the basic system of secret contracts untouched.
The public therefore needs to see more than a total savings figure. It needs a manager-by-manager accounting of what was examined, what was challenged, what was recovered and what remains unresolved.
Every exclusion should have a written explanation. Every refusal to provide records should reach the trustees. Every material finding should survive the end of a negotiation.
A manager’s willingness to offer a discount must not buy silence about the underlying conduct.
A compliant contract can still be an outrageous bargain
CERS’s description emphasizes checking whether contracts are being followed. That is useful work. It is also an inadequate stopping point.
A private equity manager can follow an agreement perfectly while collecting excessive compensation under its terms.
If Kentucky agreed to an overpriced arrangement, confirming that the manager charged the agreed price does not establish that the price was prudent.
The review must distinguish among billing errors, unauthorized expenses, contractually permitted but excessive charges, and the total economic cost of the investment.
Otherwise, “the contract was followed” could become the latest defense of a terrible contract.
Pension data must stay out of competitors’ hands
XTP says it obtains detailed investment cost information, investigates contractual compliance and negotiates with service providers. Its website also claims that it has no conflicts because it works exclusively for asset owners.
That claim deserves scrutiny across the ownership structure.
An investigator could obtain information about competitors’ fee concessions, side letters, expense practices and negotiating positions. Those records can have substantial commercial value.
Kentucky should require explicit restrictions preventing identifiable manager information from reaching Apollo, other investment managers, or unauthorized affiliates and owners. Those restrictions should be independently tested.
Access to public pension contracts must never become a private intelligence service for a connected investment business.
Kentucky needs public rules and an independent referee
The legislature, trustees and state oversight officials should require:
Full disclosure of the XTP agreement, including compensation definitions, caps, exclusions, termination provisions and confidentiality terms.
A published review plan identifying covered managers, priorities and objective standards for scrutiny.
Independent examination of connected firms, including any Apollo or Wilshire-related relationships within the assignment.
Independent verification of savings, excluding automatic fee step-downs, reductions caused by declining assets, and concessions already secured by others.
Separate treatment of recovered overcharges, so money already owed to retirees is not casually treated like a newly negotiated discount.
Public reporting of findings and unresolved problems, with protections against settlements that conceal misconduct or unnecessarily waive claims.
Trustees must also compare the bounty with competitively priced alternatives. A contingent fee may reduce upfront spending, but half the recovery can still be an extraordinary price.
The same standard applies here: follow the money, disclose the conflicts and examine every manager under consistent rules.
XTP may identify meaningful savings. Kentucky should recover every dollar it can. But successful recoveries would not erase ownership conflicts, justify selective scrutiny, or establish that the remaining fees are reasonable.
Kentucky retirees should not have to wonder whether the firm investigating Wall Street’s fees is protecting a financially connected Wall Street interest.
Open the contracts. Publish the targets and the findings. Put connected firms under an independent examiner. Make every dollar of the bounty auditable.
A fee investigation that leaves the secrecy intact risks becoming one more profitable layer of the pension problem.
By Chris Tobe, CFA, CAIA | The CommonSense 401k Project
Your 401(k) statement may show a familiar American investment company, a target-date fund, or an insurance company promising safety. That label does not tell you whether your retirement savings depend on a Cayman partnership, a Luxembourg credit fund, a Bermuda reinsurer, or several of them. 401(k)s in SEC registered mutual funds do not have to worry nearly as much about these issues, but as these assets go under 50% of 401ks, CITs and other more non-transparent vehicles need more scrutiny.
Congress should require the annual Form 5500 filing to show that entire chain. Workers should be able to discover where their retirement investments are legally organized, who controls the money, how fees are collected, and what happens when they want it back.
Offshore is already a major part of private finance
The SEC’s Private Fund Statistics for the fourth quarter of 2025 show that 45.4% of reported private-fund net asset value was domiciled outside the United States. Cayman alone accounted for 29.7%.
The differences across categories matter. Cayman represented 53.7% of qualifying hedge-fund NAV and 23.8% of the Section 4 private-equity-fund population. These are asset shares within SEC reporting populations, not percentages of all limited partnerships worldwide. www.sec.gov
Private credit has a substantial offshore infrastructure too. An Alternative Credit Council/Dechert survey found that approximately 59% of responding managers used Cayman for private credit funds, and approximately 59% used Luxembourg. Managers could select multiple domiciles; these figures measure managers’ use of jurisdictions, not global market shares. www.dechert.com
Offshore structures are part of the machinery that can stand behind retirement products marketed to American workers.
Follow legal ownership and follow the money
A Cayman domicile does not prove that a plan wired its contribution to a bank in Cayman. The fund could use a U.S. bank account and invest in American businesses. A domestic fund can also invest through offshore entities.
That complexity strengthens the case for disclosure.
A bank address answers one question. The partnership agreement answers another. Neither alone reveals the complete investment.
Tax planning is often part of the design. Offshore corporate blockers can address unrelated business taxable income for tax-exempt investors. Other structures address foreign investors’ exposure to U.S. taxation. Legal form and tax classification matter: an offshore partnership is not automatically a corporate blocker. www.sec.gov
Workers deserve to know whose tax problem the structure solves, who benefits, what it costs, and whether it changes their recovery rights.
“Tax efficient” should begin an explanation. It should never end the inquiry.
Target-date funds can conceal the chain behind a retirement year
Together, those issues create a dangerous disclosure gap.
An investment can sit several layers below the option named on a participant’s statement. Its fees, borrowing, withdrawal restrictions, and valuation practices can become difficult to identify. Meanwhile, delayed recognition of changing values can make reported volatility and correlation look reassuring.
An offshore address does not establish valuation abuse. But neither does a daily target-date-fund price establish that every underlying investment was independently repriced that day. The CommonSense 401k Project
Congress should require disclosure that connects legal structure to economic exposure and the methods used to measure it.
Annuities bring a second offshore route
Fixed annuities deserve particular scrutiny because the insurance promise can obscure the assets and counterparties supporting it.
Life insurers increasingly rely on private credit. A Chicago Federal Reserve working paper, revised in April 2026, identified $849 billion of private-placement credit on life insurers’ balance sheets in 2024, representing 14% of general-account assets. The authors found private-equity-owned insurers were important drivers of the growth. chicagofed.org
Private credit can involve offshore funds, financing vehicles, and securitization issuers. Separately, insurers can transfer economic exposure through offshore reinsurance. These channels can overlap. Neither should disappear from retirement-plan disclosure.
Treasury’s 2025 insurance report described reserves ceded to offshore jurisdictions as nearly quadrupling between 2019 and 2023, to more than $450 billion. It identified offshore reinsurance as a potential blind spot in conventional leverage measures. home.treasury.gov
An annuity’s U.S. issuer therefore does not supply a complete map of its financial backing.
Nor does “reserves offshore” necessarily mean a corresponding pile of cash moved overseas. Under funds-withheld and modified-coinsurance arrangements, backing assets can remain on the originating insurer’s books while contractual arrangements transfer economic exposure. www.federalreserve.gov
That raises concrete questions. Who selects the assets? Can an affiliated manager collect fees? What collateral supports the reinsurer’s obligation? What happens if the insurer must recapture the business during a crisis?
A “guaranteed” label answers none of them.
Congress should mandate a Form 5500 investment-chain schedule
Form 5500 already has insurance, service-provider, financial, and pooled-investment reporting components. Congress should build on that system and require standardized disclosure through every material layer. Naming the outer fund is inadequate. dol.gov
The legislation should require:
The complete entity chain. Identify each feeder, master fund, partnership, blocker, holding company, insurer, and reinsurer creating material exposure. Report domicile, controlling owner, legal form, relevant regulator, and unique identifier. Cover direct holdings and material indirect exposures.
The dollars exposed. State the plan’s investment and its attributable exposure by jurisdiction, asset class, and counterparty. Distinguish legal domicile, custody location, and the location of underlying borrowers or assets. Reconcile totals to prevent double counting.
The purpose and cost of offshore entities. Explain tax, financing, marketing, or regulatory reasons for each material offshore layer. Identify beneficiaries and associated expenses.
Every layer of compensation. Disclose management fees, carried interest, financing costs, affiliate payments, commissions, revenue sharing, and insurance compensation. For fixed annuities, report portfolio yield, participant crediting rates, and retained spread on a defined, consistent basis, identifying estimates and allocation limits.
Liquidity and control. Disclose gates, capital calls, surrender charges, market-value adjustments, borrowing, collateral pledges, and rights to suspend payments. Identify who controls the assets and who can change those terms.
Valuation and risk methods. Identify valuation frequency, independent pricing, manager estimates, and adjustments for stale prices. Explain how volatility, correlation, and diversification claims account for differing valuation schedules.
An insurance-specific offshore supplement. Identify relevant reinsurance arrangements, ceded exposure, affiliate relationships, assets retained or transferred, collateral, recapture provisions, and applicable solvency regimes. Where general-account assets are pooled, require issuer-level disclosures and explain any allocation to the plan; do not invent contract-specific ownership of backing assets.
Public, usable reporting. Require searchable, machine-readable filings and a plain-English participant summary. Protect account numbers and personal information while making material structures, fees, and risks public.
Secrecy cannot be the price of admission
Congress should place a direct information-supply obligation on providers seeking access to ERISA retirement money. Plan fiduciaries should have to obtain and evaluate the disclosures. Providers should certify their submissions, and material omissions should carry enforceable penalties and correction requirements.
“Proprietary” should not excuse withholding material fees, offshore counterparties, or withdrawal restrictions.
The legislation should establish that adding a feeder, CIT, insurance contract, or offshore affiliate does not extinguish the disclosure obligation. Exposure must remain traceable through the structure.
Workers receive tax benefits to save for retirement. Financial firms receive access to those savings. Congress should make access conditional on accountability.
If Wall Street wants offshore structures in America’s 401(k)s, it should have to explain every material layer in a public Form 5500 filing.
Workers should not need a subpoena to learn what stands behind their retirement savings.
By Chris Tobe, CFA, CAIA | The CommonSense 401k Project
Fred Reish, one of the leading attorneys advising retirement plan fiduciaries, deserves credit for explaining an issue the investment industry too often buries beneath sales presentations: liquidity.
His October 12 article draws a useful distinction. Under the Department of Labor’s proposed investment regulation, SEC-registered open-end mutual funds offer a straightforward route to the protection addressing plan-level liquidity because of their required liquidity risk management programs. Collective investment trusts require additional investigation and review. Reish also recognizes the danger that reliance on provider representations can become a box-checking exercise. Fred Reish
That is excellent practical guidance—and an invitation for plan sponsors to ask harder questions.
The protection he discusses is proposed and limited to this liquidity issue. It is not blanket immunity for selecting a mutual fund. But the practical lesson is compelling: the mutual-fund framework already supplies a protection that sponsors choosing other vehicles must investigate themselves.
The committee needs an exit, too
The DOL proposal identifies plan terminations, recordkeeper changes, and corporate transactions as potential sources of substantial redemption demands. It also recognizes that withdrawals by other investors can disrupt a pooled vehicle’s allocation. These are operating concerns that committees need to examine before investing. govinfo.gov
A retirement committee should ask a plain question before buying any complicated investment:
If we decide this manager should be fired, how do we get our money back?
A participant’s ability to make an ordinary withdrawal does not answer whether the employer can move the entire plan’s investment.
Consider a hypothetical target-date CIT that accommodates normal withdrawals using incoming contributions and publicly traded holdings. The arrangement may function comfortably until a large employer leaves, several plans redeem together, or a market decline coincides with rising withdrawals.
The committee needs to understand what happens then. Who can delay payment? What notice is required? Can withdrawals be capped? What assets get sold first? Who bears the cost?
A marketing promise of liquidity is only as useful as the contracts and assets supporting it.
The target-date label does not answer the liquidity question
My concern is especially acute when private equity, private credit, or restrictive insurance contracts sit inside target-date CITs.
A retirement-year label tells the committee almost nothing about the enforceable withdrawal terms of the underlying investments.
The committee should demand a complete explanation of how the outer fund’s redemption promises fit the underlying contracts. If one layer offers frequent withdrawals while another can hold capital for years, someone must explain how that mismatch is managed—and who bears the consequences if the assumptions fail.
Here is a simple hypothetical. A portfolio begins with $90 in liquid assets and $10 in illiquid assets. Investors redeem $40, paid entirely from the liquid holdings. The remaining portfolio contains $50 in liquid assets and the same $10 in illiquid assets.
The illiquid allocation has risen from 10% to approximately 16.7%, without buying another dollar of private investments.
The people who remain now hold a different portfolio. A committee should want to know whether the manager has tested that situation before workers experience it.
Smooth accounting can hide the problem
In my recent “Target-Date Fund Risk Games” article, I explained how delayed private-asset valuations can depress measured volatility and distort correlations. That concern belongs directly beside the liquidity analysis. The CommonSense 401k Project
A model may praise an allocation for its smooth reported returns while overlooking the difficulty of selling it at its stated value. Publishing a daily fund price does not prove that every underlying holding has been freshly valued or can be converted into cash at that price.
Consultants should have to explain both the valuation assumptions behind their risk charts and the withdrawal assumptions behind their liquidity claims.
Otherwise, a committee can be sold an investment as “safer” precisely because its accounting recognizes market stress slowly, while its contracts make responding to that stress more difficult.
Follow the contracts through every layer
My “Who Is Your Regulator?” article makes the related transparency argument: the committee needs to see through the investment’s outer wrapper. Banking supervision of a CIT trustee does not make the structure identical to an SEC-registered mutual fund or answer every question about its underlying contracts. The CommonSense 401k Project
The relevant questions reach every material underlying fund, partnership, and insurance contract.
Congress should require a standardized Form 5500 attachment identifying those layers, their regulators, material withdrawal restrictions, valuation methods, and the costs of exit. Providers should have to supply the information. Committees should document their review.
Workers should not need litigation to discover where their retirement money can become trapped.
The easiest route deserves serious consideration
My conclusion from Reish’s analysis is straightforward: for sponsors seeking a simpler, more transparent liquidity review, SEC-registered mutual funds offer an obvious place to start.
A CIT can have a legitimate investment rationale. The sponsor should still demand a concrete explanation of its benefits after accounting for fees, transparency, withdrawal rights, and the additional work required to evaluate them.
A lower advertised expense ratio cannot settle that comparison if the committee has not examined the underlying costs and restrictions.
Reish deserves praise for making the distinction clear. Committees should act on it.
Before putting workers into a more complicated structure, explain why the benefits justify the complications—and show exactly how the money gets out.
By Christopher B. Tobe, CFA, CAIA | The CommonSense 401k Project
I support considering environmental, social and governance factors when they help protect retirement savers. Climate exposure, workforce practices, conflicts of interest and corporate accountability can affect investment results. Fiduciaries should examine those risks.
But ESG has become a political football. Republicans attack the E and S. Democrats celebrate them. Too often, both sides ignore the G—and Wall Street collects the fees.
Governance means opening the books, controlling conflicts, verifying performance, understanding liquidity and protecting participants from excessive costs. An investment does not become well governed because its manager signs a sustainability pledge. Nor does it become prudent because a politician calls it “anti-woke.”
The Trump Department of Labor deserves especially sharp criticism. Its alternative-investment agenda would expand access to expensive, opaque structures while offering fiduciaries additional protection from litigation. That is a peculiar way to put workers first.
Trump’s DOL attacks the label while opening the door to the products
President Trump’s August 7, 2025 executive order directed the DOL to facilitate alternative investments in retirement plans, consider safe harbors and prioritize actions to curb ERISA litigation. The department rescinded its 2021 supplemental private-equity caution on August 12, 2025.
The March 2026 investment-selection proposal would establish a process-based prudence safe harbor. It identifies performance, fees, liquidity, valuation, benchmarking and complexity as factors for review.
Those are legitimate subjects. The problem is what counts as an adequate answer—and how much protection the government would give fiduciaries who accept the industry’s answers.
The proposal’s fee framework considers not only risk-adjusted expected returns but other “value,” including benefits, features and services. I see a dangerous opening: high fees can be defended through a growing collection of claimed benefits that are difficult for participants to measure.
Will workplace sales access be repackaged as financial education? Will proprietary-product marketing become participant engagement? Will a consultant’s endorsement help turn an expensive investment into a supposedly valuable service package?
Those are risks the DOL should close off explicitly. A sales opportunity for a provider is not automatically a benefit for a worker.
The department should demand stronger evidence before workers’ money enters opaque products. Instead, this proposal risks making a documented process a shield for accepting weak evidence.
Pro-ESG and anti-ESG can be the same business strategy
The administration’s hostility to ESG is especially hollow when the private-market firms positioned to benefit have promoted ESG themselves.
KKR says it became a signatory to the UN-supported Principles for Responsible Investment in 2009. Blackstone identifies its signatory status beginning in July 2021. Signing the PRI expresses a commitment to incorporating ESG into investment practices. It is not independent certification that every fund is transparent, inexpensive or prudently managed.
In my earlier Allison Ball article, I examined KKR’s reported former sponsorship of the State Financial Officers Foundation alongside its ESG commitments and Kentucky pension business. The governance question is who finances the political infrastructure surrounding investment decisions—and what the public can see about those relationships.
A firm can market sustainability to one audience while maintaining relationships with an anti-ESG political network. That does not establish an illegal payment or purchased decision. It does expose how little an ESG label tells us about actual accountability.
Wall Street can sell to both camps. Participants pay either way.
ESG does not require expensive investments
There are low-cost ESG-screened index mutual funds and ETFs. Vanguard’s ESG U.S. Stock ETF, for example, lists an expense ratio of 0.09%.
A fiduciary can evaluate an ESG-screened index option using familiar questions: What does it own? What does the screen exclude? How much does it cost? How does it change diversification, sector exposure and expected risk?
Some screened portfolios may differ only modestly from an unscreened alternative. Others may differ substantially. Nobody should declare their returns “indistinguishable” simply because both are index funds. The comparison must be demonstrated.
But the existence of low-cost screened products destroys the argument that considering ESG requires paying private-equity fees or accepting an opaque insurance contract.
If two options genuinely serve participants’ financial interests equally, an ESG preference can help decide between them. A higher-fee manager should have to substantiate its financial case rather than sell a moral excuse for the fee.
Keep the tiebreaker from becoming a fee loophole
The regulatory history matters. The 2020 rule used an “indistinguishable” financial comparison. The Biden DOL’s 2022 rule broadened the formulation to investments that equally serve the plan’s financial interests over the appropriate time horizon, allowing collateral benefits to break a genuine tie.
It also retained the prohibition against sacrificing returns or taking additional investment risk to pursue unrelated objectives.
My position is straightforward: keep that participant-first constraint real. Do not broaden the tiebreaker further, and do not allow speculative collateral benefits to manufacture financial equivalence.
The Trump DOL’s alternative-investment proposal is a separate regulatory initiative. But its expansive treatment of other “value” raises a related danger: higher costs being justified by benefits whose value to workers is asserted rather than proved.
Neither party should permit ESG, education, diversification or lifetime-income branding to become an all-purpose excuse for higher fees, more risk and less transparency.
Governance starts with the investment contract
The G must apply to the product holding participants’ money, not merely the companies in a manager’s sustainability report.
Private-fund interests can be securities, and their advisers may be SEC registered. That does not give the fund the same regulatory structure and public disclosure obligations as an SEC-registered mutual fund. Adviser registration is not mutual-fund registration.
Private-equity and private-credit valuations often depend on models and managerial judgments rather than current market transactions. That creates a governance conflict when valuations also influence reported performance, fundraising or compensation. An audit does not turn an estimate into an executable market price.
The Global Investment Performance Standards provide a framework for performance reporting, including alternative investments. They are voluntary; verification is also voluntary. Fiduciaries should demand the actual performance report, the scope of any compliance claim and independent assurance relevant to the investment being offered. A firm-level marketing statement does not answer every fund-level question.
For a Cayman-domiciled partnership, the questions should be concrete: Which legal entity receives the money? Who holds the assets? What records can the fiduciary obtain? Which court can enforce the investor’s rights? How can the plan exit? Offshore domicile alone does not prove misconduct, but complexity must never substitute for accountability.
Fixed annuities present another governance problem. The insurer declares the credited rate under the contract and can retain an embedded spread that participants cannot readily inspect. A stable account balance does not itself disclose the economic value of the assets supporting the promise, the insurer’s credit risk or the cost of leaving.
Insurance regulation is not the same as mutual-fund regulation. Fiduciaries should demand enforceable protections, clear compensation disclosures and a credible assessment of credit and liquidity risk.
Private real estate and digital assets require scrutiny of their own valuation, custody, leverage and exit arrangements. A registered wrapper cannot erase the risks of what it holds.
An ESG attribute cannot cure a badly governed investment structure.
Indiana exposed the hypocrisy—and the cost of political shortcuts
In 2023, an Indiana fiscal analysis projected that an anti-ESG proposal could reduce pension investment returns by approximately $6.7 billion over ten years, including by restricting access to private markets and active managers.
That estimate was a forecast, not a realized liquidation loss. It does not prove that private partnerships would universally sell for 70 cents on the dollar.
But it exposed a contradiction: sweeping anti-ESG policies can collide with pension investments in firms that have embraced ESG commitments. Politicians cannot coherently condemn an entire investment philosophy while quietly exempting favored high-fee managers.
Nor should Democrats treat those managers’ ESG pledges as evidence of good governance. As I argued in my CalPERS ESG critique, sustainability branding cannot excuse inadequate scrutiny of the investment manager and its contracts.
For illiquid assets, fiduciaries should disclose credible exit-price evidence before anyone orders a political divestment—or claims that maintaining the investment is costless.
Put the G back into fiduciary responsibility
Congress and the DOL should require disclosure of every layer of compensation, valuation methods, relevant performance standards, independent assurance, liquidity restrictions, affiliated transactions and material political or lobbying relationships.
For target-date and other multiasset funds, those disclosures must reach the underlying investments. A reassuring label on the outer fund is insufficient.
Fiduciaries should document why an expensive or opaque structure serves participants better than a transparent, lower-cost alternative. Claimed education benefits should identify actual services, costs, conflicts and limits on product solicitation.
Republicans should stop attacking ESG while promoting high-fee firms that practice it. Democrats should stop accepting ESG branding as a substitute for accountability.
The Trump DOL should stop treating expanded product access and reduced litigation exposure as substitutes for stronger participant protection.
I am pro-ESG when it means examining material risks and holding managers accountable. I oppose using it to excuse expensive, conflicted investments.
The G stands for governance. Open the books. Verify the claims. Protect the participants.
By Chris Tobe, CFA, CAIA | The CommonSense 401k Project
There is a dangerous way to make a target-date fund look safer without making workers’ retirement savings safer.
Keep publicly traded stocks and bonds marked to market. Add private equity and private credit valued through infrequent appraisals and discretionary models. Perhaps add insurance contracts whose reported values follow contractual accounting.
Then feed those incompatible return histories into a standard-deviation and correlation model.
The assets with the slowest recognition of changing economic conditions can emerge as the portfolio’s supposed stabilizers.
The spreadsheet can reward the delay in recognizing risk—and justify putting more retirement money into the investments creating that delay.
That is the risk game.
As I argued in “The Diversification Lie,” a smooth reported return is not proof of economic stability. When those returns drive target-date selection, the accounting distortion becomes a fiduciary problem.
Standard deviation measures the numbers supplied to it
Standard deviation measures variation in a return series. It cannot determine whether those returns accurately and promptly reflect changing asset values.
A publicly traded security records market movements as they occur. A private investment may incorporate the same economic deterioration through several subsequent valuation updates.
Spread recognition of a loss over several periods, and measured volatility can fall. The underlying business has not necessarily become safer. Its debt has not disappeared. Its refinancing needs have not diminished.
The IMF has identified stale and potentially subjective valuations, fragile borrowers, and multiple layers of leverage as vulnerabilities in private credit. These are substantive risks that a smooth historical return series may fail to reveal.
Correlation can reward the same accounting delay
Suppose public stocks fall sharply this quarter while private-company valuations adjust next quarter.
A same-quarter correlation calculation can suggest that the two investments move independently. Yet both may be responding to the same economic shock, recorded on different schedules.
That creates an apparent diversification benefit from delayed measurement.
Different businesses can provide real diversification. But fiduciaries must distinguish diversification of economic exposure from differences in when losses enter the books.
A different accounting clock is not a different economic risk.
The allocation model can turn the distortion into a recommendation
In a conventional mean-variance model, an investment offering an attractive assumed return, low volatility, and low correlation can receive a larger allocation.
If those favorable inputs reflect valuation smoothing, the model can allocate more money because the risk was measured poorly.
The same problem can affect consultant scorecards even when no optimizer determines the portfolio. A target-date series may receive a favorable ranking for lower historical volatility, smaller reported drawdowns, or an attractive risk-adjusted return.
Consider two hypothetical funds with similar economic exposures. One recognizes changing values promptly. The other recognizes some changes gradually. A scorecard may penalize the first for volatility and praise the second for stability.
The manager recognizing losses promptly can look worse than the manager recognizing them slowly.
Not every target-date manager uses unadjusted historical data. Some use forward-looking assumptions, public-market proxies, or adjustments for valuation lag. The question is whether those corrections were made, whether they were credible, and whether the committee examined them.
A glossy “lower-risk” chart supplies none of those answers.
A daily price does not establish daily price discovery
A target-date fund can publish a daily net asset value while incorporating underlying private-asset valuations that remain substantially unchanged between periodic updates.
Daily calculation of the outer fund’s price does not establish daily revaluation of everything inside it.
The move from a mutual fund to a CIT does not automatically create this problem. A CIT holding the same publicly priced securities may have substantially similar investment risk.
The concern is what the new structure permits the manager to put inside—and what participants and fiduciaries can discover about it.
If a target-date fund combines market prices, private valuations, and contractual values, its risk analysis must explain how those differences were handled. Simply blending the return series can manufacture an appearance of comparability that the underlying measurements do not support.
Why this becomes a fiduciary issue
ERISA requires fiduciaries to act prudently and loyally and to diversify investments to minimize the risk of large losses, unless the circumstances make diversification clearly imprudent. Those duties concern participants’ actual economic interests.
DOL’s target-date guidance tells fiduciaries to investigate the fund’s strategies and the risks of its underlying investments. Selecting a retirement-year label and accepting the provider’s risk chart does not satisfy that investigation.
A serious fiduciary concern arises when a committee:
Selects a target-date series because of supposedly lower volatility without investigating valuation lag.
Accepts diversification claims based on correlations calculated from mismatched valuation schedules.
Treats smooth returns as a substitute for examining leverage, liquidity, and credit exposure.
Pays higher fees for a claimed risk reduction that depends materially on untested accounting assumptions.
Continues relying on the same presentation after receiving evidence that its inputs are unreliable.
These are failures of investigation and judgment that can exist before a market collapse exposes the portfolio.
A subsequent loss does not automatically establish a breach. But fiduciaries should not need a collapse to discover that their selection process compared unlike measurements as though they were equivalent.
Consultants cannot turn questionable inputs into prudent advice by adding a logo
Consultants are hired because committees need expertise. That makes the treatment of valuation smoothing central to the service being purchased.
What data did the consultant use? Were private-asset returns adjusted? Were public-market proxies considered? Did the consultant test whether the recommended allocation survived higher volatility and correlation assumptions?
Did the consultant explain the difference between reported volatility and economic risk?
Where a consultant acts as an ERISA fiduciary, its advice is subject to fiduciary obligations. Its precise legal status depends on its role and the applicable law. A plan committee also retains responsibilities for prudent selection and monitoring of its advisers; hiring expertise does not make those responsibilities disappear.
A particularly troubling situation arises when a consultant understands the smoothing problem but presents the resulting low-risk numbers without a meaningful explanation. Compensation or commercial relationships favoring the recommended products would demand additional scrutiny.
An expert’s presentation should expose the measurement problem. It should not give the problem professional cover.
Congress should make the risk game visible
Litigation alone is an inadequate disclosure system. Workers should not have to suffer losses, locate counsel, and fight through discovery to learn how their default retirement investment was classified as safe.
Congress should require a standardized Form 5500 attachment for target-date and other multiasset funds, covering material underlying investments regardless of their legal structure.
The attachment should disclose:
How assets are valued and how often underlying valuations substantively change.
The volatility and correlation assumptions actually used to justify allocations.
Whether and how those assumptions address smoothing and valuation lag.
How estimated risk and recommended allocations change under prescribed alternative assumptions.
Material leverage, withdrawal restrictions, and unfunded commitments.
Information the manager refused or failed to provide.
The decisive disclosure is a side-by-side test: Does the “safer” portfolio still look safer when the accounting assumptions change?
The law should require consistent sensitivity methods while identifying adjusted results as estimates. It should also require investment providers to supply the information and committees to document their review.
“Proprietary” should not be an excuse for concealing the material assumptions used to allocate workers’ retirement savings.
Workers deserve economic risk analysis
Standard deviation and correlation are useful tools when the data and assumptions suit the question. They become misleading when treated as complete measures of risk across assets whose values are recognized on fundamentally different schedules.
A portfolio can become more leveraged, less liquid, and more expensive while its reported volatility falls.
Calling that portfolio safer without investigating the measurement distortion is a claim fiduciaries should have to substantiate.
Retirement money should be allocated according to economic risk—not according to which manager has the smoothest accounting.
How Private Equity Will Sneak Into Your Retirement Account
Private equity wants access to your 401(k). The easiest route is to bury its contracts inside an investment with a reassuring name: a target-date fund.
Private equity contracts can impose fees and expenses 20 times those of low-cost 401(k) investments. A 2% annual management fee alone is 20 times a 0.10% fund expense ratio—before carried interest and additional expenses. Managers also exercise enormous discretion over valuations used to calculate their reported performance.
My position is straightforward: no competent, honest, transparent regulatory system should permit retirement investments to hide their full costs or let managers mark their own performance scorecards without rigorous, independent scrutiny.
The industry wants access to workers’ retirement savings without accepting the transparency and accountability associated with SEC-registered mutual funds. Collective investment trusts, or CITs, provide a route around that mutual-fund framework.
Your retirement account can remain subject to ERISA while the investments inside it move through a maze of different regulatory systems.
The Department of Labor oversees ERISA fiduciary obligations. The SEC regulates registered mutual funds. State and Federal Banking regulators supervise CIT trustees. State insurance departments regulate annuity issuers. Private funds add another layer of legal entities, contracts, exemptions, and sometimes offshore domiciles.
Each layer gives the industry another opportunity to obscure who holds the money, who sets the fees, who values the assets, and who is responsible when something goes wrong.
The Target-Date Doorway
Target-date funds are a powerful distribution channel because employers frequently select them as the plan’s default investment, known as a qualified default investment alternative, or QDIA. Workers can end up in these products without making an affirmative investment selection.
Historically, a target-date portfolio generally combined stock and bond funds, changing their proportions as the retirement date approached. The industry’s ambition is to add private equity, private credit, annuities, and other lucrative contracts to that mix.
The investment wrapper is already changing. Mutual funds were 71% of target date funds in 2015. By the end of 2025, CITs held 54% of target-date assets, leaving mutual funds with approximately 46%. CITs have become the majority vehicle in the target-date market.
CITs are exempt from the registration framework that applies to mutual funds. Most CIT trustees are state-chartered trustees with weak oversight and controls.
Follow the Money laundered by layers of Weak Regulators
Consider a plan offering five target-date funds: 2030, 2040, 2050, 2060, and 2070. Each uses a different allocation among six underlying investments.
The outer target-date vehicle is a CIT administered by a Nevada-chartered trust company. Inside it, the money travels through additional layers:
Underlying investment
Intermediate vehicle
Contract or investment inside it
Large-cap equity
Oregon-chartered trustee’s CIT
S&P 500 index exposure through a separate-account annuity issued by an Iowa-domiciled insurer
Small-cap equity
Pennsylvania-chartered trustee’s CIT
Small-cap index exposure through a separate-account annuity issued by a Connecticut-domiciled insurer
International equity
Oregon-chartered trustee’s CIT
International index exposure through a separate-account annuity issued by a Kansas-domiciled insurer
Fixed income
Oregon-chartered trustee’s CIT
General-account fixed annuity issued by an Iowa-domiciled insurer
Private credit
Nevada-chartered trustee’s CIT
Interest in a Delaware-domiciled private credit fund
Private equity
Nevada-chartered trustee’s CIT
Interest in a Cayman Islands-domiciled private equity fund
This is an illustrative composite based on structures I have encountered or seen in development. It is not a claim that one identified plan currently holds this exact combination.
The insurer’s domiciliary state identifies its primary insurance regulator. A private fund’s Delaware or Cayman domicile identifies where the entity is organized; it does not, by itself, establish who regulates its investment manager or what investor protections apply.
That is precisely why Congress must require both domicile and actual regulatory jurisdiction to be disclosed.
A worker may think “large-cap equity” means ownership of a conventional stock fund. In this example, the worker’s exposure runs through a CIT and an insurance contract. The words “private equity” reveal even less about the underlying partnership agreement, valuation practices, fee arrangements, leverage, and withdrawal restrictions.
A single target-date label can conceal a chain of contracts spanning several states and an offshore jurisdiction.
Disclosure Must Reach the Underlying Contracts
Existing disclosures do not give participants a uniform, comprehensive map through every layer of a multi-asset retirement investment.
Workers need to know more than the outer fund’s name, allocation, and reported expense ratio. They need to know:
What legal entities and contracts actually hold their retirement money.
Which regulator supervises each trustee, insurer, fund, and investment manager—and which activities that supervision covers.
Every layer of fees, expenses, carried interest, insurance spreads, and payments to affiliates or service providers.
Who values the investments, how performance is calculated, and whether reported returns receive independent verification.
What happens when participants want their money back, an insurer is downgraded, or a private fund suspends withdrawals.
A regulator overseeing the trustee is not necessarily examining every underlying contract for the protections workers assume they have.
Congress should prohibit the use of regulatory layering to conceal information that would have to be disclosed if the plan held the underlying investment directly.
Congress Must Act Regardless of Intel
The Supreme Court’s Anderson v. Intel case concerns whether an investment-underperformance claim must identify a “meaningful benchmark” to survive the pleading stage. That decision could affect whether participants reach discovery and obtain evidence about complicated investment arrangements. It does not directly decide a comprehensive statutory right to underlying-investment disclosure.
Large plans can use master trusts and custom portfolios to create similar layers of complexity. Congress must cover those structures alongside CITs and mutual funds.
Workers should not have to file a lawsuit, defeat a motion to dismiss, and spend years pursuing discovery to learn where their retirement money went.
Transparency must be a statutory obligation that applies before the money is invested.
Congress should require a standardized Underlying Investment and Regulatory Disclosure Schedule attached to Form 5500 and available to participants without charge. It should cover every target-date fund, CIT, master trust, separate account, and other pooled or multi-asset arrangement used by an ERISA plan.
The schedule should require:
Complete identification of every underlying fund and investment contract, through every intermediate layer, including its legal name, structure, domicile, and share of plan assets.
Identification of every responsible regulator, the entity and activity it supervises, and applicable registration exemptions. “SEC-registered adviser” must never substitute for disclosure that the fund itself is unregistered.
Full disclosure of costs at every level, in dollars and percentages, including management fees, carried interest, fund expenses, underlying portfolio-company charges, insurance spreads, commissions, and affiliate payments.
Standardized performance and valuation disclosures, including gross and net returns, valuation methods, independent verification, and whether a fund claims compliance with recognized performance-reporting standards.
Complete liquidity and credit-risk disclosures, including lockups, gates, surrender charges, market-value adjustments, capital commitments, downgrade provisions, and rights following issuer default.
Public access to governing investment contracts and material amendments, with no confidentiality clause permitted to override the disclosure obligation.
Trade-secret claims should never conceal fees, valuation methods, withdrawal restrictions, or regulatory jurisdiction from the workers whose savings finance these investments.
The legislative principle is simple: if an investment receives tax-favored retirement money, its managers must disclose what they are selling, what they are charging, how they calculate performance, and who regulates them.
A retirement date on the label is no excuse for secrecy underneath.
Before private equity gets another dollar of workers’ default retirement savings, Congress should require the industry to open the books.
By Christopher B. Tobe | The CommonSense 401k Project
Some accountability has survived in the AT&T pension risk transfer litigation.
On September 28, 2026, Judge Nathaniel Gorton dismissed the claims against AT&T while allowing a prudence claim against State Street to proceed. The litigation concerns AT&T’s $8.05 billion transfer of pension obligations to Athene in 2023. State Street had been given responsibility for selecting the annuity provider. This is a chance to examine that selection—. [1]
For retirees concerned about being moved into an insurer’s fixed annuity, that opening matters. The question is whether the fiduciary adequately protected the people whose lifetime income would depend on the selected insurer.
Hiring a Consultant Is Not the Same as Delegating the Decision
The dismissal of AT&T raises an understandable question: In 401(k) litigation, hiring a consultant generally does not eliminate the plan committee’s responsibility. Why did AT&T get out here?
The distinction is decision-making authority.
When a consultant recommends investments and a committee makes the decisions, the committee remains responsible for those decisions. A valid delegation of discretionary authority can change who is responsible for the delegated function. That principle can apply in a 401(k) plan as well as a pension risk transfer.
ERISA nevertheless preserves responsibility for a fiduciary’s own conduct in establishing and continuing a delegation, and for specified forms of participation in another fiduciary’s breach. Delegation is not blanket immunity. [3]
Here, the court found insufficient allegations that AT&T influenced the selection, ignored warning signs, failed to monitor State Street, or knew of a breach. That is a conclusion about the allegations in this case—not a rule that employers can escape all fiduciary responsibility by hiring an outside firm. [1,2]
My concern is practical: How much can retirees know about the sponsor’s role before they obtain the internal documents? The appointment agreement, instructions, communications and oversight records may reveal far more than a public announcement saying an “independent fiduciary” selected the insurer.
A Pension Promise Has Value Before a Check Is Missed
The surviving claim also carries an important recognition: A pension annuity can allegedly be less valuable because it is riskier, even while payments continue.
The court maintained its standing determination and allowed State Street’s prudence claim to advance. It left disputes over insurer comparisons and the protection afforded by Athene’s separate account for later factual examination. Only Count IV survives; the other claims were dismissed. [2]
That approach is more sensible than requiring retirees to wait for an insurer’s failure.
In my earlier article on the Lumen litigation, I criticized the idea that retirees have suffered no injury because the Athene “time bomb” has not exploded. The economic question is the value of the replacement promise when it is received—not merely whether this month’s payment arrives. [5]
A pension risk transfer requires scrutiny of the protections surrendered and the protections received. Retirees deserve an explanation of who now owes their benefits, which assets support them, what happens under financial stress, and what recourse remains.
State Street’s Selection Deserves Examination
The Department of Labor’s annuity-selection framework calls for examining the insurer’s portfolio quality and diversification, capital, size relative to the transaction, other liabilities, contract structure and guaranty protections. It directs fiduciaries toward the safest available annuity, subject to a participant-interest qualification. [4]
Those considerations support concrete questions for discovery:
Which insurers were realistically available, and how did their bids compare?
What did State Street examine concerning affiliated investments, private credit, reinsurance and liquidity?
What legal protection does the separate account actually provide?
What happens after a serious downgrade, and are there enforceable remedies?
What information did State Street provide to AT&T, and what oversight followed?
A separate-account label should lead to examination of enforceable contract rights. It should not end the inquiry.
My policy position remains that retirees need meaningful downgrade protections before insurer distress becomes insolvency. Whether this particular contract contains adequate protections must be established from the contract and supporting evidence.
The Epstein Files Add Questions About Candor
The Epstein disclosures deserve mention, with precise attribution.
The Financial Times reported that Jeffrey Epstein proposed an Athene-related tax plan he claimed could save Apollo’s co-founders as much as $300 million, seeking a 25 percent success fee.. [6]
In February 2026, the AFT and AAUP asked the SEC to investigate whether Apollo’s disclosures accurately described its executives’ dealings with Epstein. Their letter cited released documents concerning Athene and tax matters. These are concerns raised in a request for investigation, not findings of wrongdoing. [7]
These later disclosures cannot automatically establish what State Street should have known in 2023. They do, however, reinforce the need to examine the reliability of representations, governance and due diligence involving the Apollo-Athene organization.
Some Accountability Is Better Than a Closed Courthouse Door
AT&T’s dismissal is disappointing. But State Street must still defend the prudence of its insurer selection.
The surviving claim offers an opportunity to examine whether retirees received the protection a prudent fiduciary should have obtained. Discovery should establish the available alternatives, the risks examined, the contractual safeguards and the actual decision process.
Retirees should not have to experience an insurer failure before the fiduciary’s work can be scrutinized.
By Christopher B. Tobe — The CommonSense 401k Project
On Tuesday, October 6, the Supreme Court will hear oral argument in Anderson v. Intel Corporation Investment Policy Committee. The immediate question concerns what workers must allege before a lawsuit challenging imprudent retirement investments can proceed. The practical stakes reach much further: can fiduciaries place workers’ savings in complicated private investment structures, then use those structures’ uniqueness to make accountability harder?
Tuesday is the argument, not the decision. But the choice taking shape deserves public attention. Supreme Court docket
Private equity’s representatives understand the stakes. The American Investment Council and Managed Funds Association filed a brief supporting Intel. They argue that affirming the meaningful-benchmark standard would reduce litigation risk and encourage alternative investments in 401(k)s. They portray litigation as an obstacle to workers receiving better returns and diversification. I see a different danger: making accountability harder can make expensive products easier to sell. Industry brief
The retirement industry’s sales opportunity is clear. The participant’s benefit still needs to be demonstrated.
The Court already explained who bears the loss
In Thole v. U.S. Bank in 2020, the Court’s majority denied standing to DB pensioners whose fixed benefits had been paid and would remain the same regardless of the lawsuit’s outcome. Justice Kavanaugh expressly contrasted those benefits with 401(k) accounts, whose value depends on investment decisions.
Your employer generally bears the funding obligation for a traditional DB pension. In a DC plan, investment losses and excessive investment costs reduce the account supporting your retirement.
Justice Sotomayor’s dissent, joined by Justices Ginsburg, Breyer and Kagan, argued that beneficiaries had an enforceable interest in their retirement trust’s financial integrity. She warned against preventing pensioners from challenging mismanagement until pensions approached default. The dissent emphasized trust protections, fiduciary duties and participants’ ability to enforce them. Majority and dissent
Thole did not grant automatic standing for every DC claim, and it was not a ruling specifically about private equity losses. But its economic distinction matters: a worker whose own account suffers investment harm presents a different situation from a pensioner whose fixed payment is unaffected.
Intel shows how the pension structure reaches the 401(k)
Intel’s filings provide a concrete example. Its 2015 401(k) report described a master trust containing assets of the 401(k), Retirement Contribution Plan and Minimum Pension Plan. Automatically enrolled participants’ deferrals went into target-date funds investing in master trust accounts. The underlying investments included hedge funds and private equity, venture capital, private credit and other private assets. Some closed-end holdings could not be redeemed on a presently determinable date. Intel’s 2015 filing
The structure later changed. Intel’s 2019 report states that investments moved into units of proprietary collective investment trust funds in January 2018. The master trust was dissolved in January 2019, with the 401(k)’s interests transferred to a separate trust. The report identified all three plans as participating in the CIT trust. Intel’s 2019 filing
That history matters. A participant can hold an interest in a target-date fund, which holds pooled investment interests, which ultimately expose the worker to private funds and their contractual terms.
These filings disclose the structures; they do not prove intentional concealment. My concern is that reporting an investment as units in a pooled vehicle can leave the underlying economics several layers away from the worker trying to understand them.
Pooling DB and DC investments does not pool the employer’s promise to pay a fixed pension. The 401(k) participant still bears the account’s investment results.
A benchmark can help—or protect the decision being challenged
Intel defended its strategy as a way to reduce volatility and downside risk. The Ninth Circuit found the plaintiffs’ comparisons inadequate because the proposed comparator funds had different objectives and risks. Judge Berzon’s concurrence nevertheless stressed that an empirical comparator is not universally required to plead imprudence. Ninth Circuit opinion
Fair comparisons matter. A stock-heavy fund’s higher return during a bull market does not, by itself, establish that a more conservative portfolio was imprudent.
But a benchmark built around the challenged allocation answers a limited question: how did the selected allocation perform against a representation of itself? It does not necessarily answer whether choosing that allocation was prudent for participants in the first place.
If the complaint challenges substantial private equity exposure, requiring a comparator with substantially the same exposure risks assuming the wisdom of the decision under challenge.
A custom strategy should face meaningful evaluation of its total costs, liquidity, valuation practices, conflicts and expected benefits. Its uniqueness should not become a shield.
Workers need a fair path to the evidence
Committee records, manager agreements, fee arrangements and the analysis supporting a private investment allocation can be essential to evaluating prudence. Workers ordinarily have far less access to those materials than fiduciaries and their advisers.
A pleading rule should require facts supporting a plausible claim. It should also recognize where the evidence resides. Demanding a near duplicate investment before discovery can make the most complicated arrangements the hardest to challenge.
The Court should preserve a realistic path for workers to challenge plausibly imprudent decisions and obtain the evidence needed to evaluate them. That would not predetermine Intel’s liability. It would preserve accountability.
Private equity managers want access to workers’ retirement savings. Workers deserve access to an effective process for protecting those savings.
The Supreme Court already recognized in Thole that 401(k) participants bear the investment consequences. It should ensure that they also have a fair opportunity to enforce the fiduciary protections that accompany them.
Intel Update: A “Meaningful Benchmark” Must Not Become a Shield for 600-Basis-Point Fees
By Christopher B. Tobe | The CommonSense 401k Project | October 6, 2026
Tuesday’s Supreme Court argument in Anderson v. Intel Corporation Investment Policy Committee sharpened the concern raised in my October 5 article: can a retirement investment become so customized that its design protects it from meaningful accountability?
Bloomberg Law reports that the justices appeared receptive to requiring meaningful comparisons for claims based on investment underperformance, while debating how precisely to define that requirement. Justice Amy Coney Barrett raised the danger that language requiring similar aims and strategies could lead lower courts to demand an investment “twin.” These are signals from oral argument, not a ruling. [1]
That distinction could determine whether workers obtain the evidence needed to examine expensive investments inside their 401(k)s.
My concern about target-date funds is that their varying allocations create a convenient barrier to comparison. Different retirement dates, glide paths, stock-bond mixes and alternative investments allow providers to argue that almost any competing fund is insufficiently similar.
I believe the industry has incentives to design and promote structures that make transparency and accountability harder. I believe that blocking transparency to protect fees was the original purpose of target-date funds. The immediate problem is their potential use today: each additional layer of customization can become another reason to reject a participant’s comparison.
Workers should not have to find a duplicate of a disputed investment decision before they can question that decision.
Fees provide a particularly revealing example. Morningstar’s research identifies expense ratios as a strong predictor of future fund success. In its 2016 study, the cheapest U.S. equity funds had a 62% success rate, compared with 20% for the most expensive group; success meant surviving and outperforming their category. That evidence concerns the funds studied, rather than every private equity investment, but it reinforces why costs deserve serious scrutiny. [2]
Future gross returns are uncertain. Fees reduce what participants keep.
Consider a simplified hypothetical allocation within a target-date fund—not an assertion about Intel’s actual holdings or charges:
Component
Allocation
Annual component cost
Contribution to portfolio cost
Large-cap equity index fund
90%
10 basis points (0.10%)
9 basis points
Private equity
10%
600 basis points (6.00%)
60 basis points
Total
100%
—
69 basis points (0.69%)
The 10% private equity sleeve produces approximately 87% of the combined investment cost. On $100 million, these assumed costs equal $690,000 annually: $90,000 for the index allocation and $600,000 for private equity.
An allocation entirely to the 10-basis-point index fund would cost $100,000 annually. The difference is $590,000. That comparison isolates the cost burden; it does not establish that the two portfolios have identical risks or that the all-index portfolio is the appropriate retirement allocation.
The private equity sleeve would need to earn 5.9 percentage points more annually before fees than the index sleeve simply to offset its additional assumed cost, holding the other 90% unchanged. Whether it can justify that hurdle, its risks and its liquidity restrictions deserves examination.
The assumed 600 basis points represent the sleeve’s annual economic cost for this illustration. Actual private equity costs must be examined from the agreements and accounts: management fees, carried interest, fund expenses, offsets and additional layers of charges. A headline expense ratio may not answer every economic-cost question, and overlapping charges must not be counted twice.
Now consider how a rigid benchmark rule could frustrate that examination.
Participants identify a lower-cost target-date alternative. The defense responds that it lacks the same private equity allocation. Participants identify a low-cost public equity alternative for the expensive sleeve. The defense responds that public equity follows a different strategy.
If those differences end the case before discovery, the expensive allocation becomes part of its own protection. Workers are effectively told to accept the disputed design before they can challenge its economics.
A benchmark matching the private equity allocation may help evaluate implementation. It cannot, by itself, establish that choosing the allocation was prudent. Nor does a different overall allocation make component fees impossible to examine.
The Supreme Court should preserve that distinction. Comparing realized performance requires attention to risk, objectives and investment exposure. A plausible challenge to excessive costs, conflicts or the process used to approve an allocation presents additional questions. Plaintiffs still need supporting facts, but a search for an identical portfolio should not automatically displace those questions.
Discovery can establish what fiduciaries actually reviewed: the complete compensation arrangements, expected net benefits, available alternatives, liquidity terms and reasons for selecting expensive private investments. Those records can support or undermine a claim. A customized portfolio should remain open to that examination.
My October 5 article warned that uniqueness could become a shield. Tuesday’s argument makes the danger more concrete.
The Court should ensure that “meaningful benchmark” means a useful tool for evaluating a claim. If it becomes a requirement to reproduce the very allocation being challenged, it can protect high fees and discourage scrutiny.
Workers deserve to know what each investment costs, why it was selected and what evidence justified paying more. A target-date label should not make those questions harder to ask.
Sources
[1] Bloomberg Law, Jacklyn Wille, “Justices Debate How Much 401(k) Benchmark Guidance to Give,” October 6, 2026.
