By most accounts, the Trump administration and its Securities and Exchange Commission is taking a relatively friendly view of private markets, including cryptocurrency. As such, there is growing speculation that private market investments, especially private equity, could be made more available to DC plan participants. But with ERISA’s heightened focus on fees and transparency, will retirement plan advisors and sponsors take up the opportunity?
Examining the Case
It’s worth considering the merits of private markets investments and why they have been of interest to the DC world. Potential benefits include higher returns, reduced volatility and access to emerging opportunities.
A study conducted by the Georgetown University Center for Retirement Initiatives, in conjunction with CEM Benchmarking, tested three scenarios of adding illiquid assets to target date options from 2011 to 2020. Based on researchers' assumptions, the study found that DC plan participants may be missing out on up to $35 billion in annual investment growth due to a 0.15% lower return than defined benefit plans achieved with diversified portfolios that include private equity.1
Moreover, since private equity investments have relatively low correlations to public markets, they can help to mitigate market volatility.
In terms of opportunity, with fewer companies going public, DC participants currently have reduced access to growing companies that are available within the private equity space.
However, these advantages often come with trade-offs such as higher fees, limited liquidity, sometimes opaque valuation methods, complex reporting, participant confusion and less regulatory oversight, as outlined in a 2025 Bloomberg column.2 Morningstar also recently debated the pros and cons of private markets in DC plans.3
Is a Shift in Store?
Looking back, the first Trump administration took a relatively favorable stance toward including private equity in DC plans, while the Biden Department of Labor was more cautious. In a 2021 revised information letter,4 while not prohibiting the inclusion of private equity in DC plans, the Biden DOL emphasized the fiduciary duty to conduct thorough due diligence and evaluate such investments relative to other available options. Now, given the Trump administration’s past policies and more recent vocal support of cryptocurrency, it seems likely that private markets will see a more favorable regulatory recession.
As reflected in a recent session at the April 2025 NAPA Summit, “Alternative Realities: is the Time Ripe for Alternative Investments in DC Plans?”, interest in private markets among DC plans already seems to be growing.5
Even with uneven growth in the past, the amount of private equity in the retirement segment is substantial: as of 4Q 2024, $12.4 trillion was in DC plans, according to the ICI, with target date funds topping $4 trillion at the end of 1Q 2025.6 For the most part, additional private investments likely would not be standalone options on plan menus, but rather a sleeve in a target date fund or part of a managed account where the advisor has fiduciary responsible for the asset allocation. The cap of 15% on illiquid assets allowed in target date mutual funds prompts some experts to anticipate a roughly 10% allocation for private equity within such funds.
Balancing the Variables
Should advisors recommend TDFs with allocations to private equity? One study by Neuberger Berman modeled two hypothetical TDF portfolios over a 40-year glide path, one with a 10% private equity allocation and one without.7 The results showed private equity improved wealth accumulation, often with only a slight increase in portfolio fees.
Of course, past performance does not indicate future returns, but with its higher return potential and lower volatility, we believe private equity presents a strong case—though advisors must consider suitability, particularly for those nearing retirement.
As with all investments, advisors need to understand the needs and situations of their clients to determine what investments should be offered, but the case for private markets is strong, with momentum building and perhaps enabling advisors to differentiate themselves.
