How Private Equity Got Its Hands on Billions in Americans’ Retirement Money

Private equity firms, led by Apollo Global Management, have gained control over billions in Americans’ retirement savings by transforming how pensions are managed and paid out, often shifting risks offshore. Apollo created Athene, a life insurance company that purchases pension obligations from corporations and converts them into annuities, effectively moving retirees’ funds from federally protected pension plans into insurance products regulated at the state level. This process, known as a pension risk transfer, removes the federal backstop that protects traditional pensions and places retirees’ savings under state guarantee associations, which typically cap protection at $250,000 per policy.

Athene has converted over $50 billion in pension funds into annuities, including $1.5 billion from Alagany Technologies (now ATI), affecting thousands of retirees who previously received pensions directly from their former employer. These retirees now receive annuity payments from Athene, a subsidiary of Apollo, and have expressed confusion and concern about the change, particularly regarding the security of their benefits. Retirees like Bill Shane worry that if Athene fails, they could lose their income, especially given the company’s complex financial structure.

A key concern is that Athene invests premiums and retirement savings into higher-yielding but riskier private equity products, such as asset-backed securities and loans to Apollo-owned companies. While these investments may increase profitability for the firm, retirees do not share in the profits—their monthly payments remain fixed—and they face greater risk without enhanced protection. Additionally, Athene has established a reinsurance subsidiary in Bermuda, a jurisdiction with less regulatory transparency than the U.S., allowing the company to move liabilities off its U.S. balance sheet while keeping them within the corporate group. Critics argue this creates a lack of visibility into how these funds are managed and whether they can withstand a financial crisis.

The National Association of Insurance Commissioners estimates that 139 U.S. insurers—mostly life insurers—are now owned by private equity, managing around $700 billion in assets. Other firms have followed Apollo’s model, with some using jurisdictions like the Cayman Islands, which offer even less transparency. Regulators, including the Financial Stability Oversight Council and the Labor Department, have raised concerns about the systemic risks posed by these arrangements, but no significant regulatory action has been taken. The Biden administration acknowledged the risks but chose not to intervene, and the Trump administration has moved to further deregulate, including issuing an executive order that eases the inclusion of alternative investments like private equity in 401(k) plans.

This shift has already had real-world consequences. For example, PHL Variable Insurance Company, owned by private equity firm Golden Gate Capital, faced a $2 billion shortfall, leading regulators to limit payouts; one policyholder expecting $2 million received only $300,000 after her husband’s death. Meanwhile, former Alagany workers are suing their former employer, alleging that Athene was not the safest available annuity provider as required by ERISA, though a recent court ruling recommended dismissing the case. As private equity becomes more entrenched in retirement finance, experts warn of a potential systemic crisis if these opaque, high-risk investments fail during an economic downturn.

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