Edward Siedle: Public Pensions Paved Highway To Hell Driving 401k Investors Into Private Equity

Pension Warriors 

By Edward Siedle
July 25, 2025

Public Pensions Paved Highway To Hell Driving 401k Investors Into Private Equity

Retail investors deserve access to the same high-performing asset classes as trusted institutional investors, says the private equity industry.

Yes, America, there is a strong connection between state and local pensions’ decades-long embrace of private equity and the current push to include private equity in individual retirement plans like 401(k)s. Decades of public pensions misleading stakeholders, including taxpayers and retirees, about the risks and rewards related to private equity, has set the stage for private equity to pitch 401k plans—using decades of bogus data created by public pensions.

By way of background, over the past 20+ years, public pensions, under pressure to meet high assumed returns (often ~7%), have embraced private equity for its historically higher reported returns versus public markets. These funds have universally underreported risks and fees (especially performance fees) and overstated investment performance by accepting rosy valuations from private equity managers. For example, CalPERS and CalSTRS, two of the largest U.S. pension funds, have consistently increased private equity allocations, citing its return potential—even while acknowledging challenges in fee transparency and liquidity.

Decades of public pensions misleading stakeholders, including taxpayers and retirees, about the risks and rewards related to private equity, has set the stage for private equity to pitch 401k plans—using decades of bogus data created by public pensions.

 Starting in the late 2010s and early 2020s, there was regulatory and industry push to bring private equity into 401(k)s. In 2020, under the Trump administration, the DOL issued guidance allowing private equity to be part of diversified funds (e.g., target-date funds) in 401(k) plans. The move followed intensive lobbying by private equity firms, asset managers, and some pension industry groups. The rationale provided was that private equity can boost long-term returns and provide diversification.

In other words, if it's good enough for CalPERS, NYSTRS, and other large institutional investors, why not for individuals?

So, public pension embrace helped legitimize private equity and decades of normalization (with attendant bogus risk, expense and performance reporting) have now laid the groundwork to bring PE to do its “magic” for 401k investors.

“Let the little investor have all the advantages previously reserved for the most sophisticated, wealthy investors.”

“Trusted institutional investors have relied on PE for decades,”

“Retail investors deserve access to the same high-performing asset classes.”

Don’t fall for it: This is an effort by private equity firms and financial institutions to tap a massive new pool of retail capital. Private equity firms need new capital sources, as public pensions reach allocation limits and markets mature.

Introducing the profound risks private equity poses—risks which even the nation’s largest institutional investors have failed to comprehend, much less master, over the past two decades—to people least able to bear them, is beyond reckless.

And now that DOL has rescinded its previous guidance advising fiduciaries to exercise “extreme care” before including cryptocurrency options in 401ks, the Highway to Hell is getting more dangerous than ever.

Trina Prufer: What Protections do Ohio’s Teachers have at the Time of Retirement?

From Trina Prufer

July 25, 2025

What Protections do Ohio’s Teachers have at the Time of Retirement?

The question must be asked: Is the base benefit protected when the State can change the ORC by simply attaching a rider onto a budget bill? We have already lost retirement security. What happens if our bare-bones pension has become an even greater bait and switch?

Ohio’s teachers have always been behind the eight ball. The defined-benefit pension was not guaranteed at the time of hire, but rather at the time of retirement. The right to the vested retirement benefit is NOT in the State Constitution.

Additionally, Ohio’s teachers do not pay into Social Security, the oversight committee (ORSC) acts more like a rubber stamp for the legislature and the system itself has free rein to WASTE billions on perks and Wall Street fees.

Structurally, the benefit is not pre-funded, the system loses money (by design) and there is no transparency in how the fund is managed.

At the present time, the only member protection remaining is the right to receive the base benefit throughout the lifespan. But is this really protected? We have seen the state legislature change the composition of the STRS board through a vote taken in the dead of night. If laws and democratic protections can be so easily changed, there are no laws. They don’t apply to Ohio’s teachers.

The question must be asked: Is the base benefit protected when the State can change the ORC by simply attaching a rider onto a budget bill? We have already lost retirement security. What happens if our bare-bones pension has become an even greater bait and switch?

Trina Prufer: In the private sector, retirement plans are covered by ERISA. In Ohio, teachers are subject to the whims of politicians. Teachers have no inflation protection whatsoever.

From Trina Prufer

July 25, 2025

What is the value of STRS to teachers? 

Does the STRS defined-benefit, over a 33 year career, offer any financial benefit over contributing to Social Security and an IRA ( 60% stock 40% bond portfolio) in an amount equal to what is contributed to STRS (14%).

Right now, active teachers do not benefit at all from the 14% contributed by the employer.. it all goes towards the unfunded liability. In the private sector, it is customary to have an employer match. For STRS, this does not exist for the d-b plan.

In the private sector, retirement plans are covered by ERISA. In Ohio, teachers are subject to the whims of politicians. Teachers have no inflation protection whatsoever. 

Members need answers.

Bill Boone: STRS Board was a victim of a hostile takeover. Teachers like me are at risk.

From ORTA

July 24, 2025

STRS Board was a victim of a hostile takeover. Teachers like me are at risk.

When politicians rewrite the rules to sideline elected representatives, it sends a chilling message: your voice doesn’t matter if it contradicts our agenda.

By Bill Boone, Guest Columnist

The Columbus Dispatch

When I started teaching in the '90s, there was an understanding of what you were getting into with a teaching career.

You would be paid significantly less than other professionals with equivalent levels of education, but in exchange you’d get three things: summers, affordable health care and a solid pension.

That third pillar — our pension through the State Teachers Retirement System  — was weakened after the Great Recession, leaving many educators in doubt about when we can retire and what kind of standard of living we’ll be able to afford when we do.

That is the backdrop for the unprecedented STRS member advocacy  which culminated in the election of seven reform-minded STRS Board members who have challenged the status quo and responsibly restored some of our retirement benefits.

Unfortunately, in one late-night action at the very end of the state budget process, the legislature negated all of that work and stole our voice in our own pension planby removing the majority of our elected members and replacing them with political appointees.

This hostile takeover gives partisan politicians control over $100 billion in STRS assets.

The STRS Board currently has 11 members: four political appointees and seven members elected by active and retired educators. Under the new state budget though, four new appointees will be added in September, giving appointed members the majority, and four elected seats will phase out as the terms of current members end. In just three years, there will be eight appointed members and only three elected members.

This applies only to STRS, retaining an elected member majority in the other four Ohio public pension system boards. It is a targeted attack on educators that follows a long campaign of misinformation, anonymous allegations and politicized investigations against elected members of the board.

State leaders operated in the dark

Under the direction of Speaker Matt Huffman and Senate President Rob McColley, the budget conference committee inserted this proposal from Rep. Adam Bird at the last possible moment — it wasn’t in the governor’s proposed budget or the budget legislation from the House or the Senate — because it would not stand up to even the smallest amount of scrutiny.

Elected members on the board have fulfilled their campaign promises to increase transparency about the STRS Board and to restore benefits without risking the long- term financial security of the fund.

After a decade-long drought, retirees saw three of cost-of-living adjustments approved since the reformers took office. Moreover, the years of service required for full retirement benefits were reduced from 35 years to 32 years for active educators. These reforms were far from reckless; they were implemented with a commitment to financial responsibility.

Would you trust them with your retirement?

The STRS funding ratio has improved significantly, from 56% in 2012 to 82.5% in 2024. The amortization period for unfunded liabilities has also decreased to 10.1 years. This indicates that the fund’s long-term health is being prioritized.

Even Gov. Mike DeWine told a reporter earlier this year that, “I’m looking at it from afar, but it seems that the board is working and working in a productive way.” Yet DeWine failed to veto this when he had a chance.

When politicians rewrite the rules to sideline elected representatives, it sends a chilling message: your voice doesn’t matter if it contradicts our agenda.

The STRS is not merely a pension fund; it’s a lifeline for over 300,000 active educators and retirees. Ohio Republicans, in their quest for power, have not only stripped away the voices of educators, but have also undermined the very essence of democracy. I simply do not trust them to control our pension.

Would you?

Read online at https://www.dispatch.com/story/opinion/columns/guest/2025/07/24/ohio-teachers-pension-strs-board-republican/85327204007/