Almost Half of 401(k) Participants Would Invest in Private Markets if Offered: Study
Close to half (45%) of participants in workplace defined contribution plans say they would invest in private equity and private debt investments if their plan provided access to these assets—up nine percentage points from 36% who said so in 2024.
That’s according to newly released data from the Schroders 2025 U.S. Retirement Survey, which also found that among plan participants who say they would invest in private assets if offered, 77% said they would increase their contribution to their retirement savings plan.
Despite this growing demand, less than one-third of participants (30%) expect private assets to be available in their retirement plan within the next 5 years, 47% are unsure, and 23% don’t anticipate their plan menu will include private asset investments before 2030.
“For decades, traditional pension plan portfolios have mixed public and private investments in the same portfolio to meet their obligations to retirees,” said Deb Boyden, Head of US Defined Contribution, Schroders. “On the heels of the recent executive order directing the Labor Department to consider improving access to alternative assets for defined-contribution retirement plan participants, a wider range of employees may soon be able to combine the benefits of both asset classes to better prepare for retirement.”
Among all plan participants who would invest in private assets through their workplace retirement savings plan, the survey reveals a gradual approach to allocations is preferred:
• 51% would allocate less than 10% of workplace retirement assets to private assets
• 36% would allocate between 10-15%
• 6% would allocate more than 15%
• 7% are unsure how much they would allocate to private assets
Notably, while 78% of plan participants say private assets can enhance 401(k) portfolios through diversification and 73% believe private assets provide the opportunity for greater investment return, more than half (53%) say private assets sound risky.
Further highlighting the need for more education, just 12% of plan participants consider themselves very knowledgeable about private assets, 40% are somewhat knowledgeable, 30% are not too knowledgeable, and 18% are not at all knowledgeable.
“It’s no secret that most investors are not very knowledgeable about private assets. To date, access to private markets in the U.S. has been restricted to institutions and ultra-high net worth investors, so there hasn’t been a reason for most investors to gain a better understanding of the asset class,” Boyden added. “As the traditional barriers to entry are removed and access is potentially improved through defined contribution plans and other investment vehicles, the quality and quantity of investor education resources must improve.”
The Schroders 2025 US Retirement Survey, conducted in March and April, included 1,500 U.S. investors ages 29-79 and 602 currently participating in a workplace retirement plan.
SEE ALSO:
• Trump’s Private Equity 401(k) Push: 12 Legal Views
• $1.3 Million Needed to Retire Comfortably, Say Workplace Retirement Plan Participants
• Advisors Increasingly Support Private Market Funds in 401(k) Plans
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
