Pantheon targets defined contribution investors

Pantheon, the private equity fund investor, has hired former Verizon executive Michael Riak to help bring the firm’s products to the defined contribution community. 

Riak, who will join Pantheon in June as head of US defined contribution, worked at Verizon for 17 years. As director of savings & affiliate plans, he helped make the company the first non-financial plan sponsor to offer private equity real estate and absolute return investment options to defined contribution plan participants, Pantheon said in a statement Monday. 

“Adding high quality private equity investments to defined contribution plans will help address participants’ need to for higher returns, bringing to bear the benefits of an asset class long enjoyed by the defined benefit plans and other institutional investors,” Riak said. 

The move to integrate private equity into defined contribution plans is a reflection of the work firms have been doing to bring the asset class to retail investors. Multi-strategy firms like Kohlberg Kravis Roberts, The Blackstone Group and The Carlyle Group have been innovating ways to access capital from the huge pool represented by the retail side of the market. 

Further, a slow but impending shift is taking place among US public pension systems that are having tougher times meeting the obligations of their ever-growing defined benefit programmes, in which workers’ retirement accounts are the responsibility of the state. Several states have begun the shift to incorporate defined contribution structures into their retirement programmes, putting the onus on workers to fund a portion of their retirement accounts. 

In this situation, private equity, traditionally a staple of many public institutions’ retirement investment programmes, becomes a trickier prospect because of portability requirements, among other things. However, as firms have shown, they want (and perhaps have) to put in the time to figure out how to design products for this changing market.