AIC Releases Comment Letter Supporting DOL Proposed Rule Expanding Americans’ Retirement Options

Washington, D.C. – In a new comment letter released today, the American Investment Council (AIC) expressed its strong support for the Department of Labor’s (DOL) proposed rule to strengthen retirements by expanding access to alternative assets through 401(k)s. The comment letter was submitted to the agency on June 1 as part of the proposal’s public comment period.

AIC CEO and President Will Dunham released the following statement:

“For decades, private investment has secured retirements for millions of teachers, firefighters, and public servants, but everyday savers have been unable to access the same options. The Department of Labor’s proposed rule strengthens current law by giving plan managers a clearer roadmap for prudently evaluating alternative assets, including private equity and private credit. With this rule, more Americans will have the option of including private investment in their retirement savings strategy for increased diversification and higher returns.”

With its comment letter, AIC also submitted two new studies examining the benefits the proposed rule would have for everyday savers. A study by Dr. David T. Robinson, professor at Duke University’s Fuqua School of Business, found alternative assets outperformed public benchmarks – adjusted for risk and net of fees – over 10-year time horizons or longer.  

Additionally, a study conducted by Dr. Conrad Ciccotello, Director of the Reiman School of Finance at the University of Denver found if 40% of target date funds allocated 15% to alternative assets, workers would earn an additional $262 billion over 10 years and an additional $1,565 billion over 20 years.

More Choices Reduces Risk for Everyday Savers 

Private investment has become a crucial source of diversification as the number of publicly traded companies has significantly shrunk over the last two decades. As the letter notes, in 1996 there were more than 8,000 publicly traded companies; by 2025, that number had more than halved to fewer than 4,000 companies. Recent public market gains are substantially driven by a handful of select technology companies. As more companies choose to remain private longer, many Americans are unable to benefit from their critical, early growth periods. 

“A portfolio limited to public stocks and bonds may therefore give workers less exposure to the broader economy than it once did,” the letter states. “Alternative assets can help fill that gap.” 

The diversification offered by private investments, which do not follow public markets in lockstep, can help reduce risk at the portfolio level. 

Higher, Long-term Returns Strengthen Retirements

Public pension funds and institutions have long benefited from private investments, and a recent survey found 70% of workers want more access to private assets in their retirement plans.

“Retirement saving is long term saving,” the letter states. In 2022, two-thirds of 401(k) participants were in their forties or younger. Savers’ long-term time horizons make private investment a good fit for their goals and allow them to harness compound interest to maximize the benefits of private investments’ higher returns net of fees.

According to the letter, “Research from the Georgetown Center for Retirement Initiatives—which found that private-market returns, net of fees, outpaced public markets by 3.6% on an annualized basis since 2000—shows that even modest exposure to private real assets, private credit, and private equity could improve defined-contribution outcomes by 7% to 8% across a range of participant savings patterns.”

For many savers, alternative assets would be offered within a diversified, professionally managed investment option, such as a target date fund, which automatically readjusts for risk and the liquidity and valuation needs of the plan and its participants as they reach their target retirement date. In 2024, an estimated 84% of 401(k) plan participants utilized target date funds. Professional asset managers, not individual plan participants, are responsible for deciding the appropriate level of exposure, balancing investments to meet liquidity needs, and other essential criteria. 

Regulatory Clarity Reinforces Fiduciary Responsibilities 

The Employee Retirement Income Security Act (ERISA) requires fiduciaries to act prudently and solely in the interest of 401(k) plan participants when building an investment menu. But many fiduciaries avoid any options including alternative assets – not because they wouldn’t benefit plan participants, but out of fear of frivolous legal challenges. That puts everyday savers with 401(k)s at a disadvantage. 

“The time and expense entailed in defending even meritless lawsuits is a significant deterrent to offering participants access to investment products that would improve retirement security for millions of workers,” the letter states. “The Proposed Rule is an important step toward fixing that problem.”

You can read AIC’s statement on the DOL’s release of its proposed rule here. 

You can read AIC’s full comment letter to DOL here.

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