Employers ready for private market investments in DC plans

A new survey from Empower shows that a growing number of employers are preparing to offer private market investments – such as private equity, private credit, and private real estate – within defined contribution retirement plans.

The findings reflect a broader shift in the retirement landscape, with plan sponsors, advisors, and participants expressing increased interest in expanding access to these asset classes.

According to the survey, conducted by The Harris Poll among 205 private sector 401(k) and 403(b) plan administrators in the US, 98% of plan sponsors reported a high to moderate understanding of private market investments. More than half – 54% – said they expect participants would be enthusiastic about having access to these options, and 43% have already received participant inquiries about adding them to plans.

Nearly three-quarters of respondents are reportedly actively discussing the opportunity with advisors and consultants, and 96% indicated they would likely add private market investments if regulatory guidance were clarified.

“Employers are ready to take the next step in modernizing retirement plans by including private markets, provided the policy environment is clear,” Edmund F. Murphy III, president and chief executive of Empower, said in a statement Thursday. 

The survey results come as independent research from Cerulli Associates and the Defined Contribution Alternatives Association points to a similar trend. In a recent white paper, they found that stakeholders across the defined contribution ecosystem are developing product and education strategies to meet participant needs with private market solutions.

The research suggests private market strategies should be embedded within professionally managed investment options, rather than offered as standalone choices, and that collective investment trusts are likely to become the preferred structure for providing access.

In Empower's latest survey study, plan sponsors cited several drivers for adopting private market investments, including talent retention and acquisition (85%), return potential (82%), and portfolio diversification (82%).

However, challenges remain, with 96% of sponsors saying they would likely proceed only once regulatory and fiduciary questions are resolved. Advisors and consultants are seen as essential partners, with 72% of plan sponsors already engaging them to evaluate and implement private market options.

Empower’s previous research underscores the momentum. In its survey findings published July, 79% of workers said all investors should have access to the same investment products as institutions, and 73% agreed that professionally managed private investments in retirement plans help level the playing field.

A subsequent survey of advisors found 68% already use private markets in client portfolios, and 58% would recommend them in retirement plans today – a figure that rises to 75% among those also serving pensions.

“With trillions already invested in private markets and a wide range of US companies privately held, it’s time to expand access responsibly in retirement plans,” Murphy said.