Welcome to the latest edition of This Week in Pensions! This week, we’ve gathered stories on the SEC, the upcoming midterm elections, and alternative investments in public pensions. This is the news you need to know in the fight for a secure retirement.
NPPC News
Public retirement systems in the United States are administered by state and local officials elected into office by constituents, underscoring the critical importance of voter turnout in the midterm elections. Public pension systems across the country face potential changes as voters decide who will take office in 2027. Read more about the races we’re watching here – How the 2026 Elections Could Shape Public Retirement Policy.
The SEC Moves to Eliminate Pay-to-Play Regulations
Earlier this week, NPPC Executive Director Kendal Killian warned about a move by the Securities and Exchange Commission (SEC) to widen the opportunity for the country’s wealthiest to influence public pension investments and administration.
More details emerged this week on the SEC’s proposal. The 2010 rule bars investment firms from offering services to state and local pension systems for two years if “covered associates” donate between $150 and $350 to electoral campaigns. The rule was originally enacted after several scandals, including a bribery scam that landed an ex-CalPERS CEO in prison and a 2006 scandal in the New York Comptroller’s race.
SEC Chairman Paul Atkins released a statement stating, “Advisers’ implementation of the rule has effectively resulted in the suppression of political speech,” he said. “Ultimately, matters involving political contributions are more properly governed by local ordinances, state laws, and federal election regulations — not by the SEC.”
SEC top officials insist that remaining prohibitions on fraud and fiduciary duty requirements will not change, and will be enough to prevent pay-to-play practices.
From the perspective of public pensioners, the SEC officials’ reasoning seems lacking. The rule was put in place because of devastating financial crimes: proven Pay-to-Play schemes that jeopardized public pension funds and tarnished the entire defined benefit industry. Relaxing SEC Pay-to-Play rules aligns with the multi-pronged deregulation regime and maximalist industrial policy – tariffs, a government stake in Intel, and state-owned oil reserves – connecting high-ranking business leaders with influential government fiduciaries, creating an environment for widespread fraud, graft, and self-enrichment.
Remember, nearly everyone working on Wall Street is a millionaire. The “advisers” complaining about compliance burdens have the resources to follow the rules. Meanwhile, public employee retirees in El Paso have to go without a COLA, and AFSCME 2406 workers in Oklahoma City must get by with a measly 1% raise.
New Rules Could Clarify Private Equity’s Role in Workers’ Pensions
In yet another major rule-change proposal, the Department of Labor is proposing a new rule that would give retirement-plan managers clearer guidance on including private investments in defined contribution accounts. The proposal follows a 2025 executive order, forcing workplace retirement plans to offer access to alternative assets.
Currently, private-market investments—such as private equity, private credit, and real estate—make up less than 1% of the money in individual Americans’ 401(k)-type defined contribution retirement plans. The industry proactively sought the change and argues that allowing workers to invest a small portion of their retirement savings in these assets could improve returns and diversification. However, private investments also have higher fees, less transparency, and less flexibility, making them harder for individual retirement savers to understand and use safely.
Deloitte data projects – based on a “baseline” adoption scenario- that private capital assets in US DC plans could top $1 trillion, potentially making up 6% of assets under management for all private US DC plans by 2030.
Large institutional investors can be complicated clients at times: managed by public agencies, subject to FOIA requests, and subject to grueling public meetings of elected trustees. It’s inherently a gauntlet. The same is likely true for firms that serve clients such as the Harvard or Yale endowments, totaling $99.8 billion in assets. With periodic student protests related to “divestment” and other tensions, individual retirement accounts would act as silent partners, with far fewer points of friction.
This is analogous to what we have seen in public equities. Defined benefit pensions are managed as giant, combined assets. CalPERS, for example, has over $637 billion. Those large numbers compound exponentially, fees are smaller as an overall percentage, and the rest of the fund can offset losses if PE or a particular hedge fund takes a loss. In this sense, trustees’ fiduciary responsibility is designed to protect pensioners’ retirement security; decisions are made transparently; the risks are well known, accounted for, and pooled.
With its large share of assets, CALPERS is positioned to make demands of its vendors, and considering the consultants work for the plan and not the other way around, that is the proper relationship, governance-wise. A large institutional investor is also empowered to vote in the best interest of its core constituents – the pensioners themselves.
That was the approach CalPERS took in March 2004, when the $637 billion pension giant altered its proxy-voting guidelines, withholding support for corporate director nominees lacking a commitment to labor standards. CalPERS is not afraid to use this power. In May of 2023, the Sacramento-based plan voted against every Exxon board member in response to the oil company’s legal response to activist investors.
Wall Street firms and billionaires do not like when large, combined funds use their collective power. In 2004, JP Morgan CEO Jamie Dimon labeled two of the world’s top shareholder proxy advisers “incompetent.” Dimon blamed a much-debated cultural reversal on DEI policies, specifically on Glass Lewis and Institutional Shareholder Services (ISS), which he said should be “gone and dead and done with.” Dimon also extended his ire to those who pay for their services, including public pension funds like CalPERS, which use proxy and shareholder services to steer the strategic direction of the firms they are heavily invested in.
For a private equity and hedge fund industry looking for new revenue sources, the DC space is a logical place to turn. Public employees will make their own choices about investing their DC accounts in private equity, crypto, prediction markets, or putting their entire nest egg in betting markets, as some are doing.
There is a lot of noise in the world today. How much oil really is flowing through the Straits? How many data centers will actually get built? The answers seem to be opaque and imprecise.
The only clear signal is an ongoing trend towards the most American policies one could imagine: ongoing deregulation and a more and more individualized social safety net.
Empower Acquires Milliman’s Retirement Administration Services
This week, the behemoth financial services provider Empower completed its acquisition of Milliman’s retirement administration business, expanding its ability to manage workplace retirement and employee benefit plans. The deal brings about 800 employees to Empower and adds roughly 400 defined-benefit plans, more than 1,100 defined-contribution plans, and 100 health and welfare clients. Together, these additions represent millions of participants and tens of billions of dollars in client assets.
While Empower has described this deal as a way to offer employers a wider range of financial benefits through one platform, the acquisition raises questions about the continuing push by billionaire-backed organizations to privatize public retirement systems. Once the transaction closes, Empower’s coverage will expand to about 22 million people. They will oversee more than $2.3 trillion in assets, and administer roughly 96,000 workplace plans.
The risk for the public sector is how few players remain. The mass consolidation among financial firms and deregulation since the 1990s have reduced the number of competing asset managers, record keepers, insurers, banks, and DC account services providers. This recipe opens the door for potential shenanigans; Alaska public employees and the ARM Board found that out the hard way when Empower was found to be ripping off union members.
With the merger complete, the best hope for public employees now is that the new combined Empower/Milliman ends up more Milliman and less Empower.
Vivek Ramaswamy’s Bitcoin Blueprint for Ohio
Gubernatorial hopeful Vivek Ramaswamy has thrown his support behind legislation that would allow Ohio’s five public pension systems to invest in cryptocurrency-related investments–with no limitations. House Bill 18 would not require pensions to buy into crypto, but unlike the 10% limit placed on other state funds, it would eliminate the cap on pension investments.
Ohio’s pension systems manage about $284 billion, meaning even a small investment could involve billions of dollars. The issue has drawn attention from opponents, who note that the Bitcoin-focused company Ramaswamy co-founded and still owns a significant stake in reported a $523.5 million loss during the first half of 2026. Strive, Inc. has continued buying Bitcoin despite those losses.
Ramaswamy’s push for more deregulation also presents a potential conflict of interest. Although Strive does not have contracts with Ohio’s public retirement systems, the anti-ESG, anti-DEI firm has approached several states and done contracted work in Indiana. Exposing retirement funds to an especially volatile investment, such as Bitcoin, could put additional financial pressure on pension systems if crypto prices fall sharply.
Be sure to check back next Friday for the latest news in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.