Three Republican lawmakers introduced bicameral legislation on Thursday to clarify that plan trustees can invest in a diverse range of asset classes, such as digital assets and private equity.

Sen. Pat Toomey, R-Pa. ; Senator Tim Scott, RS.C. ; and Rep. Peter Meijer, R-Mich., introduced the Retirement Savings Modernization Act to amend ERISA and allow defined contribution plans, as well as pension plans, to invest in a wide range of asset classes outside of public markets. While nothing in ERISA currently limits the asset classes a plan can invest in, the legislation seeks to clarify that pension plan sponsors can diversify their asset classes as they wish.

“401(k) plans almost never incorporate exposure to alternative assets due to the risk of anticipated litigation by trustees,” according to a press release from the Senate Banking Committee, of which Mr. Toomey is a ranking member.

“Our legislation will provide the millions of U.S. savers invested in defined contribution plans the opportunity to enhance their retirement savings through access to the same wide range of alternative assets currently available to savers with defined contribution pension plans. defined benefit,” Mr. Toomey said in the press release. “This reform will open the door to higher returns and a more secure retirement for millions of Americans.”

The bill also promises to meet the ERISA fiduciary duty standard and promote pension plan diversification, according to the press release. As stated in the text of the bill, the range of alternative assets in which schemes can invest include commodities, digital assets, hedge funds, private equity, real estate and venture capital, among others.

As the press release notes, “retirement plans have consistently outperformed 401(k) plans because they diversify across the spectrum of asset classes, placing one in five dollars in alternative asset classes. such as private equity”.

The Defined Contribution Alternatives Association and the Institute for Portfolio Alternatives expressed support for the bill, as it “reaffirms the high standard of ERISA while reminding plan trustees that consideration of alternative investments in the part of a multi-asset vehicle choice in a DC diet menu may be appropriate.” according to their letter of support.

Other organizations supporting the bill include the CFA Institute and the Securities Industry and Financial Markets Association, among others, according to a press release from the committee.