Macroscope | Who gains most from Trump’s retirement fund reforms?
As the US allows 401(k) investors to access assets such as cryptocurrency and real estate, there seems to be little official recognition of the risks
Earlier this month, the White House announced that US President Donald Trump had signed an executive order “to allow 401(k) investors to access alternative assets for better returns and diversification”. Aside from perhaps property tycoons and tech barons, few have reason to applaud this move, which allows retirement fund investors to access risky financial assets such as cryptocurrencies and real estate.
In the US, 401(k) plans are portable schemes where contributions, instead of benefits, are defined in advance. In theory, investors have the right to assume their savings are being deployed wisely and safely.
A 401(k) is a deferred arrangement. Employees can elect to defer receiving a portion of their salary, which is instead contributed on their behalf, before taxes, to their 401(k) plan. Sometimes employers match these contributions.