Redefining Retirement: It's All Theirs

Corporate chiefs, elected officials and political insiders will gather Wednesday in Washington, D.C. to talk about people saving for their own retirement.  And who wants in on your retirement money?  Private equity underwriters (PEU).

How do the sponsors of the retirement summit feel about private equity?  BlackRock considers it a core holding.

For the Bipartisan Policy Center I started with their board of directors.  

The first person I picked was Karen Dunn Kelley.  She is currently a director for JP Morgan Private Markets Fund, which focuses on private equity.

The man to Ms. Kelley's left is former MetLife Chair Robert Henrickson.  Consider his 2006 testimony to a special Senate Committee on Aging:

In the case of Social Security, longevity risk is transferred to the social system. In traditional pension plans, longevity risk is transferred to the plan. On his or her own, an individual can pool the risk by turning to an insurance company. 

Today, most Americans realize their employer will not be providing them with a guaranteed monthly paycheck for life. Forced by competitive realities, many employers are discontinuing defined benefit pensions, sometimes exchanging them for 401(k)s. The reality is that the defined contribution plans such as 401(k)s have become the primary retirement vehicle, and that is just for people who have employment-based retirement plans. 

But 401(k)s, while popular, have not yet proved to be successful if success is measured by their ability to generate adequate income for a generation of retirees. As the burden of retirement has increasingly shifted to the individual, we now are asking individuals to do something that they have never done before--fund and finance the rest of their lives.

That was 2006 when PEUs were just ramping up affiliate buyouts, sending jobs to China and dismantling pensions.  

A 2023 study showed private equity ownership results in pension plan changes, including:

Following a private equity buyout, defined benefit pension plans are more likely to be frozen or terminated. Regarding the actuarial assumption the pension characteristics, the study author found an increase in the pension liability discount rate and decreases in the projected benefit obligations (PBO), pension assets, and contributions, but did not find significant effects on funding ratio. Additionally, the author found that investment strategies for these plans become riskier, with a higher allocation to equities and lower allocations to cash, government securities, insurance accounts, and mutual funds.

Irony?  PEU boys bathe themselves in "first responder" pension funds as a defense to releasing the slightest bit of information about their offerings and methods of operation.  Yet, they frequently cut the retirement benefit after they take over companies.

A 2024 interview showed a portion of the dance between insurance companies and private equity:

...we see life insurance companies investing in private equity for different reasons. As I mentioned earlier, investment in private equity has been growing significantly over the past 10 years, and one of the main drivers for this would be the low interest rate environment.

A different angle of that same dance shows PEUs considering life and annuities as permanent capital and acquiring books of policies or reinsuring them.

The bipartisan push to open up retirement accounts to private equity and its inbred cousin, private credit, can be seen in various new products, which are coming forward as the SEC has fewer financial cops on the beat:

State Street partnered with Apollo to offer a private credit ETF.  I'm not sure how you fairly price a long term debt obligation on a daily basis.  But the good news?  Democratization!

It's hard to see democracy being furthered in this picture, unless Goldie the dog is getting the right to vote. 

Redefining Retirement is two days away.  We'll see how it turns out, especially as politicians Red and Blue love PEU and increasingly, more are one.  

Update 3-11-25:  Reports suggest the PEU boys were at Social Security alongside the DOUGEBAG team (Department of Ungodly Greedy Executives Biased Against Government):  Jesse offered:

The character of the American political scene is eerily reminiscent of 20th century of authoritarianism, as the purveyors of oligarchy become increasingly audacious.

It appears the Insane Red Team wishes to break Social Security, privatize it and put citizens at risk for their own retirement.  Musk said of Social Security fraud:

"That's the big one to eliminate."

His big one is based on fictional fraud, so major cuts will endanger the program.  I better register my dog to vote so they can never vote for a Republican.

And by the way, the SEC approved a Blackstone Private Credit Fund for retail investors.