WA pension dollars invested in high-risk private equity

More than a half-billion dollars from the state’s pension fund is proposed to be invested in new high-risk private equity and private credit investments, including funds tied to controversial businesses like the prediction market Kalshi and the license plate recognition company Flock Safety - even as state officials have raised concerns and passed new laws related to those companies.

Despite approving recommendations for the new investments at a meeting last week, the Washington State Investment Board says it’s slowing the pace of new commitments from the state’s pension fund to private equity. Meanwhile, advocates, including pensioners, continue to pressure the board to consider the ethical impact of how state retirement dollars are invested.

The investment board, made up of 15 members including the state treasurer, two agency leaders, two legislative budget writers and representatives for the state retirement system, determines how to invest Washington’s pension fund, which currently totals about $187.6 billion, one of the largest pension funds in the country.

On April 16, the board recommended investing some of those dollars in private equity firms, with up to 150 million euros, plus fees and expenses, going to Charterhouse Capital Partners and a combined investment of up to $100 million in Spark Capital and Spark Capital Growth. The board also approved an investment of up to $300 million in Monarch Capital Partners, a private credit fund.

According to their website, Spark Capital is invested in multiple AI companies such as Anthropic, which has been under scrutiny for its involvement in the Iran war and is now in negotiations with the Trump administration for the Department of Defense to potentially use the company’s AI models. Last year the company settled the largest copyright lawsuit in U.S. history for $1.5 billion with authors, after it illegally downloaded copyrighted material.

The private equity firm also lists Flock Safety and Kalshi as companies they are invested in. Concerns around Flock Safety have been mounting since their rollout in places across the country, leading Washington state lawmakers this year to regulate their use. Kalshi, a “prediction market”-based app, was also recently sued by Washington Attorney General Nick Brown, who contends the company is actually a front for illegal gambling.

Neither Spark nor Kalshi responded to a request for comment.

Asked if the board believes those investments are ethical, James Aber, a spokesperson for WSIB, said the state investment board does not comment on “investment partners, investment strategy, or specific portfolio companies outside of Board or Committee meetings.” The board has long held that their fiduciary duty is to maximize returns at a prudent level of risk.”

Based in London, Charterhouse, one of the longest-established private equity firms, invests in healthcare and retail-related companies, while Monarch is based in Milwaukee and invests in energy and technology companies. The state has previously invested in all three firms.

Other investments made by WSIB over the years have drawn criticism from pensioners due to the types of companies their pension dollars are invested in, such as oil companies and companies that profit from war and weapons manufacturing. Members of the public have attended board meetings to voice those concerns over the past several months.

Donna Albert, a retired engineer who worked for the state for 27 years, told The Seattle Times she found it “strange” that the state’s pension fund is invested in fossil fuels, as she spent the last part of her career working to help state agencies decarbonize.

“It’s kind of crazy that our state government has worked so hard to get coal out of our electricity because of the climate harm, and yet our state government is investing in more coal elsewhere,” Albert said.

Barb Carey, a retired hydrogeologist who worked for the Department of Ecology for 35 years, said staying invested in coal ignores the board’s fiduciary duty to consider the youngest and oldest beneficiaries equally, and that the youngest workers will be the most affected by the board’s decision to stay invested in coal.

“Climate risk is a financial risk,” Carey said. “Floods, wildfires and droughts all affect the investments and the retirement security of our beneficiaries.”

Both Albert and Carey are now part of Divest Washington, a group of beneficiaries concerned with the state’s holdings in fossil fuels.

The latest round of private market investments also follows concerns from Treasurer Mike Pellicciotti, who earlier this year told The Times that the board’s reliance on risky investment strategies, particularly in private equity, leaves the state pension fund vulnerable. As one of the board’s 10 voting members, Pellicciotti was the lone “no vote last week on all investment recommendations.

Signaling that it wanted to reduce the state’s investment in private equity, the board voted in November to reduce its private equity allocation target to 23%, down from 25%. Currently, about $52 billion, or 28% of Washington’s pension fund, is invested in private equity - double the national average for state pension funds. Aber noted that the total percentage of private equity investments is down from about 29% since December 2024.

Aber said the new investments will be rolled out over several years, and therefore will have “no immediate impact” on the board’s overall allocation to private equity.

Aber noted that the board has a broad and diverse private equity portfolio, “so even while we continue to reduce our overall exposure to the asset class, it will be necessary to continue making commitments to new funds to partially offset distributions from older private equity funds that are winding down.”

According to Aber, the state saw a 9.6% annual return from its private equity portfolio in 2025, generating $5.7 billion in net capital. The board paid about $862.3 million in management fees for the private equity portfolio in 2025.

In total, about 55% of the state pension fund is tied up in private markets such as private equity, private credit and real estate.

Although private equity and private credit can be profitable, both carry high risk.

Private equity investing involves buying shares in companies not traded on public markets, but it requires investors to make longer-term commitments, meaning those funds invested are tied up and not as easily accessible. Private credit involves making loans to companies that are unable to get traditional loans from banks.

According to Alyssa Giachino, investor engagement director for the Private Equity Stakeholder Project, private equity and private credit are essentially “the same actors offering different products.”

Giachino said private credit existed on a much smaller scale previously, but has “exploded” since the 2008 global financial crisis. As banks enforced tighter regulations, it led to growth in unregulated lending to companies. There is no creditworthiness evaluation of those companies by independent agencies.

“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,” Giachino said.

Both types of investments have seen growing concerns in recent months.

Investors in private equity, for example, have expressed fears that private equity firms are overvaluing holdings, and returns on private equity have slowed. Several states, like Maine, Oregon and Ohio, have begun to reduce their state pension’s exposure to private equity, while universities like Yale and Harvard have also recently sold billions in holdings.

Investors are also starting to dial back on investments in private credit - several companies backed by private credit have had to file for bankruptcy in recent months.

Final approval for the state’s new investments will come at a later date.

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This story was originally published April 27, 2026 at 4:57 PM.