Op-ed views and opinions expressed are solely those of the author.

The Elizabeth Warrens of the world have long complained about how the rules in Washington and on Wall Street are rigged in favor of the rich.

Well, there is one federal policy that absolutely does benefit those with higher incomes over working-class Americans.

The wealthy have long had access to many of the most lucrative investment funds, including private equity, private credit, crypto assets, and real estate investment trusts. These assets have been legally closed off to the middle-class and lower-income retirement accounts. This has enabled higher-income Americans and “accredited investors” to earn higher returns on their money.

Donald Trump has taken action to fix this inequity.

In August, Trump signed an executive order called “Democratizing Access to Alternative Assets for 401 (k) Investors.” This opens access to the $12 trillion market of private equity, private credit, and digital assets to some 90 million Americans who rely on defined contribution retirement plans, such as 401ks.

Hooray!

But there is still one remaining obstacle to implementing this order: trial lawyers. The Department of Labor will soon issue formal rulemaking under the 1974 Employee Retirement Income Security Act, and these rules must prevent predatory and abusive lawsuits, or employers won’t offer these expanded plans to their workers.

Democrat-aligned trial attorneys have spent years filing frivolous class action lawsuits against employers who try to innovate in retirement plan design. Their goal isn’t to protect workers. Rather, by gatekeeping regular workers from the highest-return investments, these activist attorneys have weaponized the legal system and extracted multimillion-dollar settlements that line their own pockets. The trial lawyers get rich from these class action lawsuits, and the retirees get peanuts.

These lawsuits have created a climate of fear that discourages businesses from offering diversified, high-return portfolios to their employees.

What a shame. From 2003 to 2023, private equity returned an average of 15.2% annually, and the S&P 500 just 9.7%. That’s a massive gap, and it’s costing workers tens of thousands of dollars in lost retirement income.

White House economists estimate expanding access to private assets in 401ks could increase lifetime retirement income by up to thousands of dollars for younger workers and generate $35 billion in GDP gains. Why wouldn’t we do this?

There are clearly risks with private equity, but diversified portfolios for long-term investments lower these risks. Also, many of the investments the government has classified as “safe,” such as mortgage-backed securities, were precisely the investments that lost trillions of dollars in the 2008 housing crash. How was that safe?

The Department of Labor needs to write clear rules that protect companies from unfair lawsuits while still protecting against clear cases of fraud by unscrupulous employers. The rules should provide a safe harbor for employers who offer professionally managed funds and protect plan sponsors from abusive litigation. This will open the doors wider to higher retirement incomes for today’s workers.

The option Trump is providing would not allow workers to pick private equity funds entirely by themselves. Retirement funds will remain professionally managed. These structures already exist, and across companywide retirement funds, these investments are rendered even safer.

Americans want to have the best life they can with financial security in their retirement years. The Trump plan opens these gates to sharing America’s wealth in ways to lift ALL retirement boats. Just put a muzzle on the trial lawyers, Mr. President.

Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.

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Stephen Moore

Stephen­ Moore is an economics journalist, author, and columnist who served as the senior economics writer for the Wall Street Journal editorial page and as member of the Journal's editorial board.

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