Seattle Times : WA pension dollars invested in high-risk private equity

A new Seattle Times investigation highlights how Washington state is proposing to invest more than half a billion dollars from its pension fund into high-risk private equity and private credit funds, even as concerns grow about risk, fees, and oversight.

The story details how the Washington State Investment Board is continuing to commit capital to private markets while signaling a broader effort to slow the pace of new private equity investments. The state already has a significant share of its pension fund allocated to private equity, exceeding national averages, and pays hundreds of millions annually in management fees.

The article also underscores broader concerns from policymakers and beneficiaries about the long-term risks of these strategies, including exposure to controversial companies, climate risks, and the increasing role of less-regulated financial actors in managing public retirement dollars.

PESP perspective

Alyssa Giachino, Investor Engagement Director at the Private Equity Stakeholder Project, provided context on how private equity and private credit function within the same ecosystem:

“Private equity and private credit are essentially the same actors offering different products.”

She also noted the rapid expansion of private credit in recent years and the structural shift behind that growth:

“The private credit industry is not regulated the way banks are, and so they basically came in and took over the business that banks could no longer do because it was too risky for the entire economy.”

The article explains that private credit has grown significantly since the 2008 financial crisis, as tighter bank regulations pushed lending activity into less-regulated markets.

Broader context

The Seattle Times reporting comes amid growing scrutiny of private markets among institutional investors. The story notes that several state pension systems have begun reducing their exposure to private equity, while some large institutional investors have scaled back or sold holdings in recent months.

At the same time, concerns are increasing about valuation practices, liquidity constraints, and the long-term performance of private market investments, particularly as economic conditions shift.