Mark Uyeda, commissioner for the Securities and Exchange Commission (SEC), last week issued remarks pushing lawmakers to expand access of private investments in defined contribution (DC) plans.
Uyeda issued the comments while speaking at the Investment Company Institute’s (ICI) Retail Alternatives and Closed-End Funds Conference in New York, where he noted participant challenges in saving adequately for retirement.
“Previously, many could rely on Social Security and company-sponsored defined benefit pension plans. Now, individuals are increasingly dependent on participant-directed vehicles, such as 401(k) plans, which moved the burden of accumulating sufficient assets for retirement to them,” Uyeda said.
He added that while wide usage of target-date funds (TDFs) in 401(k) plans has yielded sufficient savings for participants, its limited diversification and exposure to private investments falls short of generating additional savings.
Instead, private investments, like private equity, private credit, venture capital, infrastructure, real estate, art, and other investment types, offer diversification and reduced liquidity not typically seen in traditional public markets, Uyeda said. As retirement savers are long-term investors, they can benefit from the risk-adjusted returns, he added.
“Private investments, while less liquid, can offer a premium for that illiquidity. For long-term investors—such as those saving for retirement—this tradeoff can be not only acceptable but desirable,” Uyeda remarked. “These investors do not require daily liquidity and may benefit from the higher expected returns associated with longer holding periods.”
He cited data from CalPERS that reported a preliminary 11.6% return on its investments for fiscal year 2024-2025. This was driven mainly by private equity portfolios, which saw a 14.3% return, CalPERS reported. Other pension systems, like the Vermont Pension Investment Commission, reported a 20.48% return in its 10-year private equity portfolio. The Massachusetts Pension Reserves Investment Trust also showed annualized returns of 18.5% from private equity over the past decade.
Uyeda argued against a zero percent allocation to private investments for private sector workers, classifying it as a “misguided notion” “dressed up under the guise of investor protection.”
He also called for policymakers to address and implement reform on what he called a “significant litigious environment” for ERISA fiduciaries who consider implementing private assets in DC plans.
Following his comments, the ICI issued a statement noting its work in ensuring a “sound and resilient legal foundation” for retail investors to add private assets to a diversified investment portfolio.
“ICI is working closely with members and other groups to advocate for such legal clarity from the U.S. Department of Labor and the SEC, building on legal precedent and long-standing practice in the ERISA and securities law spaces. We are also working in Congress to address litigation reform,” said ICI President and CEO Eric J. Pan.
Looking ahead, Uyeda said he expects to see regulatory alignment between the SEC and the Department of Labor (DOL) on overseeing private investments in DC plans. President Donald Trump’s August executive order mandates both federal agencies to review and clarify guidance surrounding such funds in 401(k) plans.