{"id":261096,"date":"2025-07-13T08:19:16","date_gmt":"2025-07-13T08:19:16","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/261096\/"},"modified":"2025-07-13T08:19:16","modified_gmt":"2025-07-13T08:19:16","slug":"elizabeth-warren-pushes-back-on-plan-to-get-private-equity-into-401ks","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/261096\/","title":{"rendered":"Elizabeth Warren pushes back on plan to get private equity into 401(k)s"},"content":{"rendered":"

CNN
\n \u00a0\u2014\u00a0<\/p>\n

\n A typical 401(k) plan only offers stock and bond funds that invest in publicly traded companies. But private companies \u2014 traditionally the domain of institutional and high-net-worth investors \u2014 have become a significant part of the overall investing market. Do they belong as an option in workplace retirement plans, given that they are often more expensive and less transparent than publicly traded securities?\n <\/p>\n

\n It\u2019s a question that\u2019s been getting a lot of attention as the private investment industry and others seek to \u201cdemocratize\u201d access to such investments. And it\u2019s an issue receiving pushback from some lawmakers and consumer advocates, including Sen. Elizabeth Warren, the top-ranking Democrat on the Senate Banking Committee.\n <\/p>\n

\n Most recently, Warren sent a letter and a series of questions <\/a>to Empower, one of the largest workplace retirement plan recordkeepers, probing its recently announced decision<\/a> to offer plan sponsors the choice of including private equity as an investment option for their employees.\n <\/p>\n

\n In its response to Warren<\/a> earlier this week, Empower \u2014 which serves roughly 90,000 corporate, government and nonprofit employers \u2014 likened the desire to give people access to private markets to the creation of 401(k)s decades ago. \u201cThe 401(k) democratized access to the public markets in unprecedented fashion and without it, many people would have no access to investing,\u201d Empower CEO Ed Murphy wrote. <\/strong>\u201cToday, we are facing a similar moment.\u201d\n <\/p>\n

\n Murphy, noting that there are far fewer publicly traded companies today than 30 years ago, cited the growth in capital going towards private companies and the estimated $13 trillion in assets in the global private equity market. \u201cThis structural shift means fewer opportunities for everyday investors saving in defined contribution plans \u2014 especially those seeking exposure to innovative or fast-growing companies.\u201d\n <\/p>\n

\n He also stressed that the new investment option it would offer would have guardrails. \u201cPrivate markets investing is not for everyone and Empower is not suggesting that it is. Empower is not advocating for unregulated or unmanaged access to complex asset classes. \u2026 It\u2019s a carefully monitored gateway.\u201d\n <\/p>\n

\n Among the guardrails Murphy said would be in place: \u201c(T)he investment manager advising to these investments in accordance with the participant\u2019s financial goals and risk tolerance, are selected by the plan sponsor and must be subject to ERISA\u2019s high standards and adhere to those standards.\u201d\n <\/p>\n

\n More specifically, Empower told CNN in an email that only participants with managed accounts will have access. (A managed account is run by an investment professional who will, among other things, manage your investments within your workplace plan in keeping with your goals, risk tolerance and time horizon.)\n <\/p>\n

\n And, the company added, the private investments would only be a portion of a larger collective investment trust that a person could select. The other portions of the CIT would be in public securities.\n <\/p>\n

\n \u201cWe believe that professionally managed solutions are the best way to offer private assets, as they offer an additional layer of analysis and fiduciary protection,\u201d the company said.\n <\/p>\n

\n In her reply<\/a> to Murphy\u2019s letter, released Saturday, Warren said she shares his stated goal of helping everyone, regardless of income or net worth, to \u201c\u2018build lasting financial security through well-designed, responsibly managed investment opportunities.\u2019\u201d\n <\/p>\n

\n But, she wrote, \u201cYour response did not meaningfully address how you would shield plan participants, and our financial system, from the structural risks inherent 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.\u201d\n <\/p>\n

\n Nor, Warren said, did the company offer \u201cdetails about your partnerships with private firms, your fees, and your incentive structures.\u201d\n <\/p>\n

\n Warren ended her letter by asking Empower to address her specific questions by Friday, July 25, 2025.\n <\/p>\n

\n So \u2026 to be continued.\n <\/p>\n

\n In the meantime, the Office of the Investor Advocate at the Securities and Exchange Commission said that in fiscal year 2026 it plans to explore issues \u201csurrounding the inclusion of alternative investments, such as private equity and private credit, in retirement savings plans and their implications for retail investors.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"CNN \u00a0\u2014\u00a0 A typical 401(k) plan only offers stock and bond funds that invest in publicly traded companies.…\n","protected":false},"author":2,"featured_media":261097,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,2499,16,15],"class_list":{"0":"post-261096","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-personal-finance","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114844949763688646","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/261096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=261096"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/261096\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/261097"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=261096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=261096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=261096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}