Improving Retirement Income Outcomes:
The Value of Adding Private Markets Assets
to the Plan Sponsor Toolbox

By Angela Antonelli

For most American workers, the path to retirement security runs through their employer-sponsored defined contribution (DC) plan. Today, more than $13.9 trillion in assets are held in DC plans nationwide, and target-date funds (TDFs), the workhorse default investment for many plan participants, are the primary retirement savings vehicle. Yet, for decades now, the investments inside these TDFs have changed little, relying almost exclusively on traditional public equities and bonds.

That may be about to change. A recent wave of innovation has brought the question of the value of private market assets, such as private equity, private credit, and private real assets, into the DC plan conversation. Major investment firms — including Apollo, State Street, Blackstone, Empower, Vanguard, KKR, Capital Group, and others — have announced partnerships to add private market assets to DC plans through TDFs and other plan structures. Federal policymakers are now paying attention, and President Trump’s August 2025 Executive Order directed federal agencies to consider ways to support the inclusion of these private assets and encourage more plan sponsors to adopt such investments in their DC plans.

Two of the latest research reports from Georgetown University’s Center for Retirement Initiatives (CRI), produced in conjunction with WTW, evaluate the value of private assets in DC plans. Although private assets should be allowed to be included in DC plans, it does not mean they should be included in all plans and by all plan sponsors. The ability to properly assess, monitor, and manage private investments is critical for fiduciary soundness and long-term participant outcomes. For plan sponsors with the appropriate expertise and governance structure, the inclusion of private assets can be beneficial.

The Investment Case: What CRI’s Research Shows

The CRI’s research series on this topic has built a consistent and compelling body of evidence. A 2018 CRI study found that incorporating alternative assets into TDFs could improve a DC participant’s annual retirement income by as much as 11 to 17 percent. A 2022 CRI study refined the analysis with more modest allocations (15–20%) and concluded that even a more modest exposure to alternative assets could boost retirement income by 6 to 8 percent net of  fees.

The most recent 2025 CRI report, “Making the Case: The Effect of Private Market Assets on Retirement Income in Cases of Disrupted Savings,” extends this research to examine five distinct worker profiles: the average U.S. worker, family caretakers, lower-income workers, job hoppers, and those who experience unexpected early retirement. For every one of these profiles, an “Enhanced TDF” incorporating modest allocations to private equity, private credit, and private real assets improved retirement income outcomes by 7 to 8 percent net of fees compared to a typical TDF.

This matters because the “average” worker is more ideal than reality. Career disruptions, caregiving responsibilities, job transitions, and early forced retirement are common experiences that significantly erode retirement savings. For example, family caretakers who step out of the workforce for caregiving responsibilities or those facing unexpected early retirement see a 7.4 percent improvement in retirement income outcomes compared with a typical TDF. For these workers, even a modest improvement in investment returns can meaningfully close the retirement savings gap.

An October 2025 Vanguard report titled “Private Assets in Defined Contribution Plans: Benefits, Risks, and Implications” supports CRI findings while also underscoring plan sponsor considerations. Vanguard’s analysis found that a 10 to 20 percent allocation to private assets in a TDF, managed by highly skilled managers, could boost retirement wealth by 7 to 22 percent and increase retirement income by 5 to 15 percent after fees over a 40-year saving horizon. Vanguard also concludes that the investment case for private assets depends heavily on the ability to identify and have access to highly skilled managers.

What to Know About Adding Private Assets to DC Plans

Market innovation is changing views about incorporating private assets in DC plans and allowing broader access to asset classes that were previously unavailable to individual savers. While plan sponsors should have the freedom to consider incorporating private assets into their plan investments, there are a few important points to keep in mind.

Investment Structure Matters. When considering how to incorporate private assets into a DC plan, the investment structure is important. The CRI’s consideration of including private assets in DC plans relies on the use of target date funds (TDFs). TDFs are attractive to consider because they have several attributes that make them a natural entry point for alternatives in DC plans.

First, participants invested in TDFs tend to reallocate their asset mixes at a lower rate than participants invested in other DC plan investment options. Second, because TDFs are allocated to multiple asset classes, most of their assets will still be able to satisfy daily liquidity and fund alternative investments. Third, like a defined benefit (DB) plan’s investment portfolio, a TDF is designed to be diversified among multiple asset classes that are selected by a plan fiduciary, so participants would not select specific asset class weightings or specific alternative funds.

As Vanguard’s report correctly notes: “… offering private assets as a stand-alone investment option would place the burden on participants to evaluate and manage the risks of private assets, including the potential for limited liquidity,” all factors that TDFs in DC plans are designed to mitigate.

The Importance of Governance and Fiduciary Oversight. A 2020 CRI report notes that the standard of care under ERISA is the same regardless of the type of investment being made. However, that standard of care may require a higher degree of knowledge and care, depending on the complexity of the asset class being considered. For private market assets, this means fiduciaries must continuously assess whether the expected net-of-fee benefits of including private market assets outweigh the added complexities. A fiduciary who would want to consider such investments but does not possess the necessary knowledge or skills in-house should consider engaging outside experts, such as a qualified Outsourced Chief Investment Officer (OCIO) or independent fiduciary advisor.

It’s Not for Every Plan. Just because private assets can be included in DC plans does not mean they should be in every plan. Plan sponsors with smaller plans, a high turnover workforce, or limited expertise in-house may find that the costs, complexity, and fiduciary demands of including private assets outweigh the potential benefits. For those plans, a continued focus on improving participation rates, increasing default savings rates, and ensuring sound public market investment options can all be steps towards enhancing outcomes.

Conclusion

The retirement savings landscape is changing. According to WTW, public markets are shrinking, with the number of publicly listed U.S. companies falling from more than 8,000 in 1996 to just above 4,000. Reduced options in public markets and increased market concentration leads to equity index returns driven by just a few companies. Private markets have grown to more than $15 trillion in total assets in 2024, and high-net-worth individuals and institutional investors have long used private assets to diversify their portfolios and improve returns. There is a fairness argument to be made for giving DC retirement plans access to the same tools.

The Georgetown CRI research demonstrates that private assets can materially improve retirement outcomes, but the path forward requires careful consideration. For some plan sponsors, the potential benefits for their participants could be meaningful. The democratization of investing is underway. How well it delivers for American workers will depend on the diligence and care with which policymakers, employers, advisors, and the investment industry together navigate the transition.

Angela M. Antonelli is the Executive Director of the Center for Retirement Initiatives (CRI) and a Research Professor at Georgetown University’s McCourt School of Public Policy.

2026-02

March 2026