Six Questions for Fiduciaries Navigating Regulatory Change and Alternative Investment Uncertainty

By: Anya Freedman, BLB&G LLP

In November 2025, I published an article for NCPERS members titled Initial Fiduciary Considerations for Offering Alternative Investments in Participant-Directed Defined Contribution Plans.¹ That piece examined a convergence of three developments: the Ninth Circuit's landmark Intel decision, the Trump Administration's rescission of the Biden Administration's Department of Labor's 2021 cautionary guidance, and President Trump's Executive Order aimed at "democratizing" access to private equity and other alternatives in retirement plans.

A lot has changed in the five months since.

On March 31, 2026, the U.S. Department of Labor published a proposed rule titled Fiduciary Duties in Selecting Designated Investment Alternatives. If finalized, it would create the first formal federal "safe harbor" — a set of steps that, if followed, would give fiduciaries legal protection by presuming they acted prudently — for the process of selecting investment options in retirement plans where participants direct their own investments, including options that contain alternative assets such as private equity and private credit.² While this rule only directly applies to private-sector plans governed by the federal Employee Retirement Income Security Act of 1974 (commonly called ERISA), it sets out a decision-making framework that courts and regulators evaluating public pension trustees will almost certainly treat as a guiding standard.

In January, the U.S. Supreme Court agreed to hear Anderson, a case that will decide whether plaintiffs suing over allegedly imprudent investment decisions must identify a "meaningful benchmark" — a closely comparable investment — at the earliest stage of litigation.³ And the private credit market, which I flagged as an area requiring careful scrutiny, has since experienced significant market stress — including elevated investor withdrawal requests and limits on how much investors could take out at several major funds — that highlight important considerations for fiduciaries evaluating whether to extend these less-liquid investment strategies to individual retirement savers.⁴

This article is a follow-up to my earlier piece. It summarizes the proposed rule, evaluates the main arguments for and against it, examines recent developments in private credit markets, and updates the guidance I offered in November — this time with a particular focus on public pension fund trustees. Public retirement systems are governed by state constitutions, statutes, and common law — not by federal law — but they have long been the most experienced institutional investors in alternative assets. Courts routinely look to federal fiduciary developments as a reference point when evaluating the conduct of public pension trustees under state law.⁵ Public plan fiduciaries who administer plans where participants choose their own investments — including governmental 457(b) deferred compensation and 401(a) defined contribution plans — should treat this rulemaking, and the market conditions in which it arrives, as directly relevant to their own governance obligations.

The Federal Safe Harbor: What It Says and Why Public Plans Should Care

The proposed federal rule lays out a process-based safe harbor specifically designed for the task of selecting the investment options that appear on a retirement plan's menu — the choices from which individual participants pick. Although public pension systems operate under state-law fiduciary rules rather than the federal regulation this rule would amend, the structure it establishes matters: it is the most detailed federal description to date of what a prudent investment selection process looks like, and state courts evaluating public trustee conduct will inevitably use it as a reference.⁶

Three core principles drive the proposal, and each one echoes principles already found in the state-law standards that govern public pension trustees across the country.

Prudence is About Process, Not Outcomes. The rule confirms that prudence is "grounded in process": a fiduciary's conduct is judged by the quality of the investigation and analysis at the time the decision was made, not by whether the investment later goes up or down.⁷ This mirrors the focus on procedure found in every major state-law fiduciary standard — whether a state has adopted the federal ERISA model (27 states plus the District of Columbia), the Uniform Management of Public Employee Retirement Systems Act (4 states), the Uniform Prudent Investor Act (7 states), the 1942 Model Statute (6 states), or a combined standard drawing from multiple sources (the remaining states).⁸

No Investment Type is Automatically Off-Limits. The rule states that "there is no per se rule respecting investment in alternative assets generally or the inclusion of private market investments."⁹ In plain terms: the federal government is saying that alternative investments are not automatically imprudent. This principle of asset neutrality — judging each investment on its own merits rather than ruling out entire asset classes — is already part of state fiduciary law as well.

Following the Process Creates a Legal Presumption (a default assumption in your favor). When a fiduciary follows the safe harbor's required steps, the decision "is presumed to have met the duties" of prudence and "is entitled to significant deference."¹⁰ This means that in any future lawsuit, the burden would shift to the plaintiff to show that the fiduciary's process was flawed — a meaningful advantage for trustees who document their work.

The Proposed Six-Factor Framework

The safe harbor's core requirement is that fiduciaries must "objectively, thoroughly, and analytically consider" six factors when selecting an investment option for the plan menu:

1. Performance: Evaluate the investment's expected returns after adjusting for risk and subtracting fees, over an appropriate time horizon.
2. Fees: Determine that the fees and expenses charged are reasonable in relation to the returns and any other value the investment provides.
3. Liquidity: Ensure the investment offers enough liquidity — the ability to convert to cash — to meet the plan's and participants' anticipated needs, including withdrawals, loans, and rollovers.
4. Valuation: Confirm that adequate measures are in place for timely and accurate pricing of the investment — a particular challenge for assets like private credit that do not trade on public exchanges.
5. Performance benchmark: Identify and compare the investment against a "meaningful benchmark" — a comparable investment, strategy, or index with similar objectives and risks.
6. Complexity: Assess whether the fiduciary has the expertise to understand the investment, or whether outside professional advisors need to be engaged.¹¹

Each factor comes with detailed illustrative examples drawn from common scenarios, including target date funds that contain private equity, lifetime income products, and hedge fund allocations used for risk reduction.¹²

Two additional points are worth noting. First, the rule does not require selecting the cheapest option. A fiduciary may choose a higher-fee investment if the additional cost is justified by better service, risk reduction, or diversification benefits — a principle consistent with the total-return approach (focusing on overall investment results rather than individual components) recognized across all major fiduciary frameworks.¹³ Second, the rule permits fiduciaries to delegate investment decisions to qualified professionals, as long as the fiduciary in charge reads, critically reviews, and understands the professional's analysis.¹⁴ Public comments on the proposed rule are due by June 1, 2026.¹⁵

The Debate Over the Proposed Rule

Reactions to the proposed rule have fallen along predictable lines.¹⁶

Defense-side attorneys and industry groups see the six-factor framework as a significant step forward, arguing that it gives fiduciaries a clear, documented process that will strengthen their position if their decisions are later challenged in court. They have praised the asset-neutral design for shifting attention to the quality of the decision-making process rather than which asset classes a plan happens to hold.

Attorneys who represent plaintiffs and consumer advocates, by contrast, have raised three principal concerns: that the extraordinarily high fees typical of alternative investments make them fundamentally problematic for retirement savers; that the rule is being rolled out at precisely the wrong time, given the current turmoil in private credit markets; and that reducing fiduciary law to a process checklist risks undermining the real protections that participants depend on.

That last concern is especially relevant for public pension trustees, whose fiduciary duties are rooted in the public trust and cannot be satisfied through mechanical box-checking alone.

Significant uncertainty also surrounds the rule's legal durability. For nearly four decades, under the doctrine established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, courts were required to accept a federal agency's reasonable interpretation of an unclear statute that the agency administered — even if the court would have read the law differently.¹⁷ That doctrine gave agencies like the DOL significant freedom to issue rules that were difficult to challenge. In June 2024, however, the Supreme Court completely overturned Chevron in Loper Bright Enterprises v. Raimondo, holding that courts must now use their own independent judgment to determine the best reading of a statute rather than accepting the agency's view.¹⁸

The practical result is that agency rules and interpretations are now easier to challenge in court, because courts will no longer give the agency the benefit of the doubt when a statute's meaning is disputed. For this proposed rule, that means challengers may argue that the DOL went beyond its legal authority in creating a presumption of prudence or in defining what counts as "significant deference," and courts will evaluate those arguments on their own terms rather than favoring the agency's position.

Recent Developments in Private Credit: Key Considerations for Trustees

When I wrote in November 2025 that fiduciaries should exercise careful diligence with respect to private credit, the recommendation reflected the asset class's distinctive characteristics. The months since have produced a series of market events that illustrate some of the liquidity and structural considerations inherent in this asset class — considerations that are particularly relevant for public pension systems evaluating whether to offer similar strategies in plans where individual participants direct their own investments.

Private credit — lending by non-bank investment firms rather than traditional banks — has grown from a specialized niche to a nearly $2 trillion market since the 2008 financial crisis. Among other factors, this was a by product of banks retrenchment from certain lending activities and institutional investors, including public pension funds, seeking higher returns and portfolio diversification.¹⁹

As the NIRS/Aon research report published in June 2025 documented, this growth was driven by structural economic forces: tighter bank capital requirements after the financial crisis, consolidation that reduced the number of U.S. banks from over 14,000 to fewer than 6,000, and a resulting gap between borrower demand and available bank lending.²⁰

Public pension funds were natural participants, and many have benefited from their investments. State and local government defined benefit plans went from having virtually no allocation to private credit at the turn of the century to a median allocation of 10 percent to private equity and credit combined by 2023.²¹

In early 2026, the sector experienced what one industry publication described as "its most challenging environment since the 2008 financial crisis."²² Three recent episodes offer useful perspective for public pension trustees evaluating private credit strategies.

Blue Owl Capital and Liquidity Management. Blue Owl Capital, one of the largest private lending firms, had concentrated more than 70% of its loans in the software industry. In February 2026, it announced it was replacing investors' ability to request voluntary quarterly withdrawals from one of its funds with mandatory "capital distributions" funded by future asset sales — a structure designed to manage withdrawal requests in an orderly manner.²³ By the first quarter of 2026, Blue Owl's flagship fund had received withdrawal requests totaling approximately 22% of all shares outstanding, while its smaller technology-focused fund faced requests of roughly 41%. Both funds paid out 5%, consistent with their stated withdrawal policies.²⁴ The key consideration for trustees: before offering a private credit vehicle in a plan where participants choose their own investments, it is important to model scenarios in which a significant share of participants request withdrawals at the same time — and to understand how the fund's liquidity provisions would operate under those conditions.

Industrywide Spread. Blue Owl was not an isolated case. Ares Management capped withdrawals from its $10.7 billion private credit fund at 5% after requests surged to 11.6%. Cliffwater LLC, which operates the largest U.S. private credit "interval fund" (a fund structure that limits how often investors can withdraw) at $33 billion, received requests on 14% of its shares — double the maximum it would allow.²⁵ A Congressional Research Service report noted that these widespread withdrawal restrictions had "generated widespread concerns and congressional attention regarding [the sector's] risks."²⁶ For trustees, the pattern reveals a systemic problem: withdrawal limits are not one-off events but built-in features of private credit funds, and they take effect precisely when participants most need access to their money.

Forward-Looking Considerations. Morgan Stanley projected in March 2026 that default rates — the rate at which borrowers fail to repay — in private credit direct lending could rise to 8%, levels comparable to those seen during the COVID-19 pandemic. The projected drivers include high borrower debt levels, tighter cash flow margins, and a wave of maturing loans in the software sector, with an estimated 11% of loans coming due by the end of 2027 and another 20% by the end of 2028.²⁷ Reuters reported in April 2026 that insurance companies affiliated with private equity firms hold an estimated $1 trillion in related assets, and that any credit losses would affect multiple investor categories including pension funds and individual investors.²⁸ The fiduciary consideration is straightforward: trustees should evaluate not only historical performance but also forward-looking risk factors when assessing any investment option. Every major state-law fiduciary standard requires consideration of foreseeable conditions over the investment's expected time horizon.

The common thread across all three episodes is a fundamental mismatch: private credit assets are difficult to sell quickly, but individual retirement accounts must be able to provide cash for withdrawals, hardship distributions (emergency withdrawals), rollovers, and investment changes. Public pension systems that have invested in private credit through their defined benefit portfolios did so with professional investment staff, long time horizons, and the ability to ride out periods when assets couldn't easily be sold. Extending those same strategies to defined contribution plans — where individual participants bear the investment risk and may need their money on short notice — requires a very different, and more cautious, analysis by fiduciaries.

Practical Guidance for Public Pension Trustees

Public pension trustees owe duties of prudence and loyalty to plan participants under applicable state constitutions, statutes, and common law — obligations rooted in the public trust that, in many states, are written into the constitution itself and cannot be weakened by the legislature.

California's Constitution, for example, grants public pension boards "plenary authority and fiduciary responsibility" over system assets, requires board members to act "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use," and mandates that the board's "duty to its participants and their beneficiaries shall take precedence over any other duty."²⁹

As Professor Scott Simon's comprehensive 50-state survey demonstrates, fiduciary standards vary significantly from state to state — from ERISA-based statutes in 27 states and the District of Columbia, to the Uniform Management of Public Employee Retirement Systems Act (UMPERSA) in 4 states, the Uniform Prudent Investor Act (UPIA) in 7 states, the 1942 Model Statute in 6 states, and blended or other standards in the remaining states.³⁰

Despite these variations, the core question under every standard is the same: was the investment decision the product of a thorough, informed, and documented analytical process? The federal safe harbor's six-factor framework — while not binding on public plans — provides a useful structure for answering that question, because it represents the standard against which courts are increasingly likely to measure trustee conduct.³¹

Trustees considering whether to add alternative investments to plan menus should focus on four practical priorities rooted in these fiduciary obligations.

Align reasonable fees with participant interests. The duty of loyalty requires that investment decisions be made solely in the interest of participants, free from conflicts of interest. Alternative investments carry complex, layered fee structures — management fees, performance-based fees, and "carried interest" (a share of profits paid to the fund manager) — that can be substantially higher than fees for traditional stock and bond funds. Trustees should compare fees against similar investments, negotiate discounts where the plan's size justifies them, and avoid performance fee arrangements that reward the manager on a timeline that doesn't match participants' retirement horizons.³²

Demand independent valuations. Unlike publicly traded stocks and bonds, which have market prices updated every second, private credit assets are "often valued on a quarterly basis utilizing net asset value estimates reported by the fund itself."³³ In other words, the fund manager tells you what the investment is worth. The Blue Owl episode demonstrated how that process can hide true risk. Trustees have an independent obligation under state law to ensure that the valuations on which participant account balances depend are not controlled solely by the asset manager with a financial stake in the reported result.

Provide clear disclosures to keep participants informed. Trustees should develop plain-English descriptions of any alternative investment option, covering what the strategy does, the key risks (including the possibility that withdrawals may be delayed or limited), expected holding periods, and how the option fits alongside traditional stock and bond funds on the plan menu.³⁴ State open-meeting and public-records laws may impose additional transparency requirements on public plans that private-sector plans do not face, and trustees should ensure their disclosure practices satisfy both fiduciary and statutory obligations.

Build a litigation-ready record to show rigorous decision making. Trustees should maintain thorough documentation of every investment decision: Investment Policy Statement versions, manager due diligence reports, fee studies, expert reports, and participant communications. This documentation will form the evidence base for any future court review of the trustee's process — and the quality of the record may determine whether the trustee prevails or faces liability.³⁵

The Defined Benefit Track Record Does Not Automatically Transfer to Defined Contribution Plans

The NIRS/Aon June 2025 research report found that public pension plans' diversified portfolios — including their allocations to alternative assets — have mostly outperformed traditional stock-and-bond portfolios over rolling five-year periods since the 2008 financial crisis, with less volatility, better downside protection, and a higher rate of meeting their actuarial return targets.³⁶ Public pension assets have more than doubled since the crisis to over $6 trillion, and the median period for paying down unfunded liabilities has shortened from 29 years to 21 years — both signs of strengthening fiscal discipline.³⁷

But that track record was achieved through institutional-scale governance: professional investment staff, long time horizons, tolerance for extended illiquidity, and access to top-tier managers. Those conditions do not automatically carry over to defined contribution plans where individuals make their own allocation decisions and may need access to their money on shorter timelines. The private credit market developments of early 2026 illustrate this distinction: institutional investors with decades-long horizons may be well-positioned to manage through periods of redemption limits and valuation adjustments; an individual retirement account holder facing a job loss, a medical emergency, or a retirement transition may have different needs and constraints.

What Has Changed Since November

My earlier article identified seven categories of practical guidance. The newly proposed rule substantially reinforces those conclusions in three important ways.

First, the six-factor framework provides the specific, detailed process guidance that my earlier article anticipated but that did not yet exist. While it is a federal construct, its analytical rigor makes it an invaluable reference point for public plan fiduciaries operating under any of the state-law fiduciary standards identified in Simon's survey.³⁸ Second, the federal rule's declaration of asset neutrality goes further than the 2020 DOL Information Letter on which my earlier analysis relied: that letter addressed only professionally managed funds with private equity components, while the proposed rule applies the safe harbor to the selection of any investment option.³⁹ Third, the rule's presumption of prudence for fiduciaries who follow the safe harbor process, if it survives legal challenge, could influence how state courts evaluate the adequacy of public pension trustees' investment processes — particularly where those processes mirror the federal framework.⁴⁰

The Supreme Court's decision to hear Anderson v. Intel is equally significant. As Sidley Austin LLP — a prominent corporate defense firm — analyzed in January 2026, the case will decide whether plaintiffs challenging investment decisions as imprudent must identify a closely comparable investment at the motion-to-dismiss stage—the earliest point at which a court can throw out a lawsuit.⁴¹ If the Court rules in favor of fiduciaries, it would "reinforce close judicial scrutiny of plaintiffs' allegations about comparator funds at the pleading stage" and give fiduciaries "a key tool for early dismissal."⁴² If it rules in favor of plaintiffs, it could make it easier to bring excessive-fee and underperformance lawsuits past the initial screening stage.⁴³ Whatever standard the Supreme Court adopts is likely to be treated as persuasive authority by state courts deciding similar claims against public plan trustees — making this a case that every public pension board and its counsel should be watching closely.

Public Pension Investors Should Engage with the Federal Rulemaking Now

Public pension trustees should take concrete steps to participate in this rulemaking before the June 1, 2026, comment deadline. While the rule will not bind them directly, the standards it establishes will shape the judicial and regulatory expectations against which their own state-law fiduciary conduct will be measured. Trustees should consider submitting comments directly through the Federal Rulemaking Portal at regulations.gov.⁴⁴

Public pension systems should also consider working together to express their voices during the rulemaking process, particularly addressing how the proposed safe harbor factors should account for the distinctive characteristics of governmental plans — including their existing governance structures, their decades of experience with alternative investments, and their separate fiduciary frameworks under state law.⁴⁵ NCPERS, as the largest trade association for public pension funds, is well positioned to coordinate comments reflecting the perspective of governmental retirement systems. The Institutional Limited Partners Association, the National Association of State Retirement Administrators, the National Council on Teacher Retirement, and state pension associations like the California Association of Public Retirement Systems and the State Association of County Retirement Systems, may also serve as effective vehicles for coordinated input.

The standards the final rule establishes will influence how state courts, regulators, and participants evaluate public pension fiduciary conduct for years to come — and trustees who have helped shape that framework will be better positioned to demonstrate that their own governance practices meet or exceed the emerging standard of care.

Conclusion: Six Key Takeaways for Public Pension Fiduciaries

As trustees face shifting regulations and legal uncertainty, it is critical to remain informed and engaged to protect your plan's participants — and protect yourselves. Here are six key takeaways from this article.

1. Use the six-factor framework as your roadmap. Regardless of the proposed rule's final form, its analytical structure — performance, fees, liquidity, valuation, benchmarking, and complexity — is the most detailed articulation available of what regulators and courts will expect. Build these factors into your Investment Policy Statements and committee review processes.
2. Apply careful due diligence to private credit. The structural characteristics of private credit — including longer liquidation timelines and periodic redemption limits — require thorough analysis when considering these strategies for participant-directed plans. Recent market conditions have illustrated how redemption provisions operate in practice. Before approving any private credit exposure, conduct rigorous stress testing, ensure robust valuation oversight, and carefully evaluate the fund's liquidity terms relative to participant needs.
3. Hire qualified professionals. Alternative investments are complex. If your board or staff does not have the in-house expertise to evaluate liquidity risk, valuation methods, fee structures, and risk profiles, engage outside consultants and document the reasons for doing so.
4. Do not mistake regulatory encouragement for investment endorsement. The proposed rule is asset-neutral by design. It does not recommend any particular investment. The political winds may favor alternatives, but the fiduciary standard has not changed.
5. Watch Anderson v. Intel. The Supreme Court's forthcoming decision could reshape the litigation landscape for fiduciary breach claims and will likely influence state court decisions in lawsuits against public plan trustees.
6. Engage now. Submit comments on the proposed rule by June 1, 2026. The final rule's treatment of liquidity, valuation, and benchmarking will set expectations that affect the entire retirement landscape — both public and private.

About the author: Anya Freedman is a partner in BLB&G's Los Angeles office and leads the firm's Fiduciary & Governance Advisory Group. She advises institutional investors and public agencies on complex torts, fiduciary law, and governance matters, empowering them to build best-in-class policies, navigate regulatory uncertainty, address legal risks, and make sound strategic decisions in securities, corporate governance, and complex litigation. Before joining BLB&G, Anya served for nearly a decade as the principal legal advisor to the City of Los Angeles public pension systems, which cumulatively invest approximately $70 billion in trust funds and administer retirement and healthcare programs on behalf of Los Angeles municipal employees and their families. She led the Public Pensions General Counsel Division of the Los Angeles City Attorney's Office. As general counsel, Anya advised pension boards and executives on board governance, regulatory compliance, responsible investing, and litigation arising from the funds' diverse investment portfolios.

Endnotes:

1. Anya Freedman, Initial Fiduciary Considerations for Offering Alternative Investments in Participant-Directed Defined Contribution Plans, NCPERS (Nov. 7, 2025) https://www.ncpers.org/blog/initial-fiduciary-considerations-for-offering-alternative-investments-in-participant-directed-define [hereinafter Prior NCPERS Article].

2. Fiduciary Duties in Selecting Designated Investment Alternatives, 91 Fed. Reg. 16088 (proposed Mar. 31, 2026) (to be codified at 29 C.F.R. pt. 2550).

3. Sidley Austin LLP, Anderson v. Intel – U.S. Supreme Court Grants Certiorari: Implications for ERISA "Excessive Fee" Litigation (Jan. 26, 2026); Sidley Austin LLP, Anderson v. Intel: U.S. Supreme Court Grants Certiorari — Implications for ERISA Excessive Fee Litigation [hereinafter Sidley Austin Analysis].

4. See, e.g., Allison Morrow, More Investors Flee Blue Owl Funds as Private Credit Fears Deepen, CNN Business (Apr. 2, 2026) https://www.cnn.com/2026/04/02/business/blue-owl-private-credit-nightcap; Leslie Picker, Blue Owl Caps Private Credit Funds Redemptions at 5% After Steep Request Levels, CNBC (Apr. 2, 2026) https://www.cnbc.com/2026/04/02/blue-owl-private-credit-funds-redemptions-requests.html; Hugh Son, Blue Owl's Software Lending Triggers Another Quake in Private Credit, CNBC (Feb. 20, 2026) https://www.cnbc.com/2026/02/20/blue-owl-software-lending-private-credit-concerns.html.

5. See, e.g., Bd. of Trs. of the Emps.' Ret. Sys. v. Mayor of Balt., 317 Md. 72, 562 A.2d 720 (1989) (looking to federal fiduciary standards in evaluating public pension trustees' duties).

6. 91 Fed. Reg. at 16088, 16093-94.

7. Id. at 16088-89.

8. W. Scott Simon, Standards of Care and Supplemental Fiduciary Duties Governing the Conduct of Trustees Investing and Managing Assets of Public Employee Retirement Systems in the 50 States and the District of Columbia, at 10-11, 27-28 (Nov. 27, 2022), available at https://ssrn.com/abstract=4287238 (cataloguing the fiduciary standards of care adopted by each of the 50 states and the District of Columbia: ERISA's standard in 27 states and the District of Columbia; UMPERSA's standard in 4 states; the UPIA's standard in 7 states; the 1942 Model Statute's standard in 6 states; amalgamated standards in 5 states; and the trust investment law standard in 1 state).

9. 91 Fed. Reg. at 16136.

10. Id.

11. Id. at 1602; 16095-16103 (proposed paragraphs (g) through (l)).

12. Id. at 16090-16103.

13. Id. at 16119-16120; see also Kellie Mejdrich, DOL's Push To Curb 401(k) Suits Could Face Court Challenges, Law360 (Mar. 31, 2026) https://www.law360.com/articles/2459774 [hereinafter Law360 Article].

14. 91 Fed. Reg. at 16102.

15. Id. at 16088.

16. Law360 Article, supra note 13.

17. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), overruled by Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).

18. Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).

19. Morrow, supra note 5; see also Eva Su, Cong. Rsch. Serv., IN12674, Private Credit Funds Redemption Restrictions: Market Context and Policy Issues (Mar. 2026).

20. Tyler Bond, Katie Comstock & John Sullivan, Evolution and Growth: How Public Pension Plans Have Diversified Their Investments Amid Changing Markets, NIRS & Aon (June 2025) [hereinafter NIRS/Aon Report], at 11-13, available at https://www.nirsonline.org/wp-content/uploads/2025/06/Evolution-and-Growth-NIRS-and-Aon_June-2025_FINAL-1.pdf.

21. Id. at 3 (Figure 1), 14 (Figure 12).

22. With Intelligence, Private Credit Outlook 2026: The Market Faces Its First Big Test, at 3 (Jan. 7, 2026), available at https://pardot.withintelligence.com/l/284832/2026-01-09/2y9p8c2/284832/1767971051hsMonBQm/Private_Credit_Outlook_2026.pdf.

23. Son, supra note 4.

24. Morrow, supra note 5; Picker, supra note 5.

25. See Hugh Leask, CNBC, Private Credit's "Zero-Loss Fantasy" Is Coming to an End (Mar. 25, 2026) https://www.cnbc.com/2026/03/25/private-credit-defaults-loan-quality-debt-risk-systemic-ai-disruption.html; Rene Ismail and Emily Graffeo, Bloomberg, Morgan Stanley Sees Private Credit Default Rates Reaching 8% (Mar. 17, 2026) https://www.bloomberg.com/news/articles/2026-03-16/private-credit-default-rates-to-reach-8-morgan-stanley-says.

26. Congressional Research Service, supra note 19.

27. Ismail and Graffeo, supra note 25.

28. Vidya Ranganathan, Private Credit Sector Stresses Could Be Catastrophic, but Not Just Yet, Reuters (Apr. 3, 2026) (quoting Oxford Economics analyst Javier Corominas), https://www.reuters.com/business/finance/private-credit-sector-stresses-could-be-catastrophic-not-just-yet-2026-04-03/.

29. Cal. Const. art. XVI, § 17(a)–(d) (amended Nov. 3, 1992, by Prop. 162).

30. Simon, supra note 8, at 10-11, 27-28; see also Unif. Prudent Investor Act § 2 (Unif. Law Comm'n 1994); Unif. Mgmt. of Pub. Emp. Ret. Sys. Act § 8 (Unif. Law Comm'n 1997).

31. See 91 Fed. Reg. at 16095-16103 (proposed six-factor framework).

32. See Restatement (Third) of Trusts § 90 cmt. b (Am. Law Inst. 2007) (duty to incur only costs that are reasonable in amount and appropriate to the investment responsibilities of the trusteeship).

33. 91 Fed. Reg. at 16116; see also Morrow, supra note 5 (reporting that independent analysis found Blue Owl's software-sector exposure to be roughly double its publicly stated figure).

34. See Unif. Prudent Investor Act § 9 (Unif. Law Comm'n 1994) (trustee's duty to keep beneficiaries reasonably informed); Restatement (Third) of Trusts § 82 (Am. Law Inst. 2007) (duty to inform and report).

35. See Restatement (Third) of Trusts § 77 cmt. a (Am. Law Inst. 2007) (fiduciary duty to act with prudence, evaluated based on the process by which the decision was made).

36. NIRS/Aon Report, supra note 20, at 22-26 (Figures 20-22; tables comparing rolling 5-year and 10-year periods of outperformance).

37. Id. at 27 (Figure 23) (public pension assets exceeding $6 trillion); id. at 28 (Figure 25) (median amortization period declining from 29 to 21 years).

38. 91 Fed. Reg. at 16096-16103.

39. Compare Louis J. Campagna, U.S. Dep't of Labor, Emp. Benefits Sec. Admin., Guidance on Private Equity Investments in Defined Contribution Plans (June 3, 2020), https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/information-letters/06-03-2020, with 91 Fed. Reg. at 16093.

40. 91 Fed. Reg. at 16094.

41. Sidley Austin Analysis, supra note 3.

42. Id.

43. Id.

44. 91 Fed. Reg. at 16088.

45. See generally NIRS/Aon Report, supra note 20, at 29-30 (discussing the importance of coordinated engagement by public pension stakeholders in federal rulemaking).