U.S. President Donald Trump strives to make it easier for Americans to use retirement savings to invest in cryptocurrencies, private equity, property, gold and other types of non-traditional assets.
On Thursday, he ordered regulators to look for ways to change rules that could prevent employers from including such products in their workplace retirement accounts, known in the U.S. as the 401K.
The move aims to ultimately give daily workers new avenues to investments previously reserved for the wealthy and institutions, while opening up previously untouched pools of funds for companies in these sectors.
But critics say this could increase the risk for savers.
Most U.S. employers do not provide traditional pensions, which brings guaranteed expenses after retirement.
Instead, employees can choose to donate a portion of the check to the investment account, and employers usually strengthen additional donations.
Government rules have historically enabled these companies to provide accounts that are responsible for taking into account factors such as risks and expenses.
In the past, employers avoided offering investments such as private equity, which usually have higher disclosure requirements than public companies with fewer disclosure requirements and are not easy to convert to cash.
The order allowed the Labor Department to review the rules for 180 days, and experts say any change is unlikely to be felt immediately.
But investment management giants like State Street and Pioneer, known for retirement accounts, have announced partnerships with alternative asset managers such as Apollo Global and Blackstone to begin offering private equity-focused retirement funds.
Trump’s personal business interests include companies related to cryptocurrencies and investment accounts.
Ministry of Labor Cancel guidance in May Starting in 2022, companies are urged to do “extreme care” before adding cryptocurrencies to the investment menu in retirement accounts.
During Trump’s first semester, the Labor Department issued guidance aimed at encouraging retirement plans to invest in private equity funds, but feared a limited litigation acquisition, which former President Joe Biden subsequently revoked.
