US Opens Retirement Savings to Private Equity & Crypto – What It Could Mean for Irish Pensions
A major policy change in the United States will allow retirement savers to invest in a far wider range of assets. Under new rules, 401(k) plans—the US equivalent of Irish defined contribution (DC) pension schemes—can now include private equity, private credit, infrastructure projects, and even cryptocurrencies.
Supporters say this could provide greater diversification and potentially higher long-term returns. Critics argue it will expose savers to higher fees, less transparency, and assets that are harder to value and sell.
Why This Matters in the US
For decades, US 401(k) plans have been dominated by publicly traded equities and bonds. This shift opens the door for asset managers to offer alternative investments—opportunities that were previously available mainly to institutional investors and high-net-worth individuals.
The change is expected to attract trillions of dollars from retirement accounts into private markets. However, these investments are often complex, illiquid, and more expensive to manage. This makes them riskier for everyday savers, especially those who may not fully understand the volatility or long-term nature of such assets.
Could It Happen in Ireland?
Under current Irish pension law—specifically the Pensions Act 1990 and EU IORP II regulations—trustees already have the legal ability to invest in alternative assets. The key requirement is that investments comply with the scheme’s Statement of Investment Policy Principles (SIPP) and the “prudent person” rule.
In practice, Irish schemes have limited exposure to private markets for three main reasons:
Cost – Members are accustomed to low annual charges (often under 0.5%), while private market funds can exceed 1–2% plus performance fees.
Governance – IORP II requires trustees to have the expertise and resources to monitor complex investments.
Liquidity – Many alternative investments can’t be sold quickly, which is challenging for daily-dealing pension platforms.
Potential Impacts if Ireland Followed the US Model
If a similar policy were adopted here, it could:
Expand diversification into private equity, infrastructure, and alternative credit.
Offer the potential for higher returns over the long term.
Increase investment costs and complexity for trustees.
Require stronger financial education so members understand risks, fees, and illiquidity.
The Bottom Line
The US move is a bold experiment in expanding retirement investment options. For Ireland, the question isn’t whether alternative assets have a place in pensions—they already do—but whether they should become a more common feature of member investment options.
The challenge will always be to balance innovation and diversification with the core responsibility to safeguard retirement security.