 options. Learn about benefits, risks, and what’s ahead in 2025.){kind=link}
Empower Retirement Plan is undergoing a major shift in 2025, as the firm rolls out new options for its 19 million plan participants—allowing inclusion of private market investments in 401(k)-type plans. This change represents one of the most significant adjustments in employer-sponsored retirement benefits in recent years.
Key Developments in the Empower Retirement Plan
Empower announced it will soon enable private market investment options—such as private equity, private real estate, and private credit—for those participating in its retirement plans. The offerings will be made available through managed accounts and collective investment trusts (CITs), designed to help address concerns of liquidity, fee exposure, and complexity.
In addition, there has been government momentum directing regulators to explore broader investment access in defined-contribution plans, including alternative assets. Empower has publicly supported this policy direction, stating that modern retirees deserve access to diversified asset classes historically available only to institutional and wealthy investors.
At the same time, political scrutiny has increased. Concerns have been raised about transparency, fees, and investor protections in Empower’s new private investment program. There is also ongoing legal debate over whether Empower has used participant data to steer them toward higher-fee managed accounts.
Key Points Summary
- What’s changing: Empower Retirement Plan will allow private equity, credit, and real estate options in certain 401(k)-type plans.
- How: Through managed accounts and CITs, intended to protect liquidity and limit fee exposure.
- Support: Government policy direction is backing broader access to alternative assets; Empower supports this expansion.
- Pushback: Questions regarding cost, transparency, fiduciary duty, and data usage.
- Timeline: Rollout expected later in 2025, with implementation depending on employer adoption and regulatory clarity.
Advantages and Opportunities
- Diversification – Private markets offer return streams that are less correlated with public markets, helping participants reduce volatility.
- Potential for Higher Returns – Private equity, real estate, and credit have historically provided stronger returns than traditional investments, though they come with higher risks.
- Better Access for Ordinary Investors – These options bridge the gap between institutional-grade investments and average retirement savers.
Risks, Concerns & Regulatory Challenges
- Fees & Transparency – Private assets often have more complex and opaque fee structures, which may raise concerns for retirement savers.
- Liquidity Constraints – Unlike stocks and bonds, private assets may be harder to value or sell. Structures like CITs help manage this risk, but challenges remain.
- Fiduciary Duty Liability – Employers offering these plans must carefully assess compliance with fiduciary obligations under retirement law.
- Data Use & Conflicts of Interest – Allegations have surfaced that participant data may have been leveraged to promote higher-fee investment products.
What This Means for Plan Sponsors & Participants
| Stakeholder | Key Implications |
|---|---|
| Participants | Need to check if their employer adopts these new options, review risk tolerance, and monitor fees. |
| Employers / Sponsors | Must ensure compliance with fiduciary standards, consult advisors, and educate employees. |
| Asset Managers | Opportunity to deliver performance while addressing transparency and fee concerns. |
| Regulators | Expected to balance innovation with investor protections, setting clear frameworks. |
Current Status & What to Watch Next
- Empower has partnered with leading global investment firms to roll out private market investment options.
- Access will depend on employer adoption and whether participants are enrolled in managed accounts.
- Government policy signals stronger support for alternatives in retirement plans, but regulatory details are still developing.
- Political and legal scrutiny is intensifying, meaning future guidelines will likely include stronger disclosure rules.
Conclusion
The evolution of the Empower Retirement Plan marks a turning point in how retirement savings may be managed in the U.S. By opening the door to private markets, Empower is giving participants more opportunities—but also more responsibility. Participants, employers, and regulators must stay alert to ensure this innovation enhances retirement security without exposing savers to unnecessary risks.
What are your thoughts on adding private markets to retirement plans? Share your opinion below and join the discussion.
FAQ
Q: When will participants see these private investment options in their Empower Retirement Plan?
A: Rollout is expected later in 2025, depending on employer adoption and managed-account structures.
Q: Are private market investments safer than traditional retirement funds?
A: They are generally riskier and less liquid, but with proper structures and oversight, some risks can be mitigated.
Q: How will fees compare with traditional retirement plan options?
A: Fees will likely be higher for private investments, though Empower has stated it will aim to keep costs competitive.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or tax advice. Always consult a qualified professional before making investment decisions.