Senator Elizabeth Warren is doubling down on her scrutiny of Empower’s recent move to offer private equity investments as an option within workplace retirement plans, raising questions about the potential risks for retirement savers and the transparency of such offerings.
Empower, one of the largest workplace retirement plan recordkeepers in the US, recently announced it would allow plan sponsors to include private equity as an investment option for employees.
This development comes as private equity firms seek to expand their reach into the trillions of dollars held in defined contribution plans – they held a total of $12.2 trillion dollars at the end of Q1 2025, according to statistics from the Investment Company Institute – which have traditionally been limited to publicly traded securities.
Warren, the top-ranking Democrat on the Senate Banking Committee, sent a letter in June to Empower’s chief executive, Ed Murphy, seeking clarification on how the company plans to protect participants from the risks associated with private markets. “While you claim that this partnership … will ‘help clients build secure and prosperous futures,’ there are many reasons to believe that the 19 million workers whose retirement funds you safekeep will be more at risk as a result,” Warren wrote .
In its response issued last week, Empower compared the current push to include private equity in 401(k) plans to the original creation of the 401(k) itself, arguing that it “democratized access to the public markets in unprecedented fashion.”
The letter from Empower CEO Murphy noted that the number of publicly traded companies has declined over the past three decades, while private markets have grown to an estimated $13 trillion in assets globally.
“This structural shift means fewer opportunities for everyday investors saving in defined contribution plans – especially those seeking exposure to innovative or fast-growing companies,” Murphy wrote .
Empower emphasized that private equity investments would only be available to participants with managed accounts, and that these investments would be part of a larger collective investment trust, with the remainder invested in public securities. The company stated, “We believe that professionally managed solutions are the best way to offer private assets, as they offer an additional layer of analysis and fiduciary protection.”
However, Warren issued a reply to Empower on Friday, expressing concern that Empower’s response did not sufficiently address how the company would shield plan participants and the broader financial system from the risks research has shown to be present in private markets.
“Ultimately, you did not explain why providing retirees with the option to invest their hard-earned life-savings in risky, expensive private markets benefits anyone other than private funds,” Warren wrote. She also pressed for more information on Empower’s partnerships, fee structures, and incentives.
The debate over private equity’s place in 401(k) plans is likely to continue, with the Securities and Exchange Commission’s Office of the Investor Advocate indicating plans to further examine the issue in the coming year.
For now, advisors and plan sponsors are left to weigh the potential benefits of broader investment options against the risks and complexity that private equity may bring to retirement portfolios
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