Leaving the Sidelines

Empower’s May announcement that the industry’s second-largest recordkeeper will begin offering private markets investments to retirement plans during Q3 2025 turned plenty of heads—including that of Sen. Elizabeth Warren (D-MA).

Empower aligned with top-tier private investments fund managers and custodians—including Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard—to provide private investments implemented through collective investment trusts (CITs). Doing so, the company said in announcing the program, provides limited exposure to diversified pools of private equity, private credit and private real estate, a structure that is designed to provide liquidity protection and reduced fee exposure.

“Empower is making a profound move on behalf of American retirement investors who should have the ability to invest in an asset class that has the potential to diversify their portfolios and offer opportunities for returns in new ways,” said Empower President and CEO Edmund F. Murphy III. “Like any investment, we believe in the importance of advice and risk mitigation for every investor. These new opportunities offered under an advice model deliver the guardrails necessary to help an entirely new investor class access private investing.”

Franklin Templeton CEO Jenny Johnson said that as a leader in private markets, democratizing alternative investing is one of the firm’s biggest priorities. “By offering private market assets through defined contribution plans, we’re providing Americans saving for retirement the opportunity to access to some of the most dynamic and growth-oriented investments available,” Johnson said of the Empower partnership. “We’re excited to be at the forefront of this transformative change in retirement planning.”

Warren Questions Empower Plan

On June 18, Sen. Warren, ranking member of Senate Banking Committee, sent a letter to Empower’s Murphy, seeking answers about the recordkeeper’s plans to allow retirement savers to invest in private equity and private credit, and the threats she sees that these types of investments pose to Americans’ retirement savings.

“Given the sector’s weak investor protections, its lack of transparency, expensive management fees, and unsubstantiated claims of high returns, we are seeking information on how your company will ensure the safety of the billions of dollars of retirement savings it safeguards as it implements this program,” Warren wrote in the letter.

“Pensions’ investments in private equity have been dubbed a ‘Wall Street time bomb.’ Even institutional investors admit their uncertainty as to whether private equity’s ‘very thin outperformance is worth the risk of opaque and illiquid investments whose actual value is often impossible to determine—investments that could crater when the money is most needed,’” the letter continued.

Empower told 401(k) Specialist it would respond to Warren’s six questions by her deadline of July 8, adding that investment decisions would be made by plan fiduciaries following a prudent process as outlined in the law (ERISA). “Empower believes in the importance of advice and risk mitigation for every investor,” the company said in a statement. “These new opportunities are offered under an advice model for plan participants and deliver the guardrails necessary to help an entirely new investor class access private investing.”

(Editor’s Note: Since publication, Empower did respond, and Warren subsequently requested further clarification. Coverage of both in links.)

NEXT PAGE: The Case Against PE in 401(k)s