Private companies have become a significant part of the investing market, but it’s unclear if they should be added to workplace retirement plans. The idea is being explored by Empower, one of the largest recordkeepers serving 90,000 employers.
Empower CEO Ed Murphy said offering private equity options would “democratize” access to investments, just as 401(k)s did decades ago. However, critics like Sen. Elizabeth Warren argue that these options are often more expensive and less transparent than publicly traded securities.
Warren sent a letter to Empower probing its decision to offer plan sponsors the option of including private equity in their employees’ retirement plans. The company responded, citing guardrails to ensure safe investing, such as requiring investment managers to advise participants according to their financial goals and risk tolerance.
Only managed accounts will have access to private investments, which would be part of a larger collective investment trust that includes public securities. Empower believes professionally managed solutions offer an additional layer of analysis and fiduciary protection.
Warren remains skeptical, asking Empower to provide details about its partnerships with private firms, fees, and incentive structures. The Office of the Investor Advocate at the Securities and Exchange Commission plans to explore issues surrounding alternative investments in retirement savings plans in fiscal year 2026.
Source: https://edition.cnn.com/2025/07/12/business/elizabeth-warren-empower-private-equity-401k