Retirement savings are not a testbed

A workplace retirement plan is not an investment platform. It is the only savings most people will ever have, selected for them by an employer they did not choose, under rules meant to keep that arrangement honest.

The proposed rule would give plan fiduciaries a defined process for adding alternative assets including cryptocurrencies. Read carefully, it protects the person making the decision rather than the person living with it.

That is the objection in one sentence. A safe harbour built on process says that a fiduciary who documented the steps has met the standard, whatever the steps produced. The participant carries the result either way.

Defenders answer that this describes every option in every plan. It does not. Most menu options are diversified funds with decades of return data and a regulatory history; the assets being added have neither.

The withdrawal of earlier guidance urging caution is the part that has attracted least attention and deserves the most. That document existed because supervisors had specific concerns about custody, valuation and fraud, and none of those concerns were resolved. The document was simply removed.

The likeliest route into plans is also the least consented. An allocation inside a diversified or target-date option is one the saver did not select and may never see, which is a different thing from an explicit choice on a menu.

Retirement money is patient, which is the argument made for allowing volatility. It is patient because it cannot leave, which is the argument against.

Nothing here requires prohibition. It requires that the standard protect the saver rather than the process, that consent be explicit rather than embedded, and that guidance withdrawn be replaced by something rather than nothing.

The people who will hold these allocations are not the people who lobbied for them. That asymmetry is the whole of the case.