Key Takeaways
- • The Department of Labor's March 31, 2026 proposed rule sets a non-exhaustive six-factor framework (performance, fees, liquidity, valuation, benchmarking, complexity) and a process-based safe harbor presuming prudence for fiduciaries who objectively, thoroughly, and analytically consider each factor.
- • Less than 1% of the $14 trillion in U.S. defined contribution assets was in private markets, compared with roughly 24% for public pension funds and 17% for private pension funds, according to the Bipartisan Policy Center citing 2023 data.
- • The proposal reaches any investment option on a plan menu, not only target date funds, meaning private assets could be offered standalone rather than only within diversified funds, as the August 2025 executive order had contemplated.
- • Roundtable participants agreed private assets should never exceed limited, professionally managed allocations, and questioned whether the rule's safe harbor adequately protects sponsors from litigation risk.
- • Small-plan access and private credit fund redemption pressures emerged as the key unresolved concerns, with the comment period closed June 1, 2026 and the rule not yet finalized.
Summary
The Bipartisan Policy Center examines the role of private market assets in workplace retirement plans, focusing on private equity and private credit as a test case. As traditional defined benefit pensions have declined, roughly 80 million American households in 2025 had a participant in a defined contribution plan such as a 401(k), placing greater responsibility on workers for retirement security.
In August 2025, President Trump issued an executive order directing efforts to "democratize access" to alternative assets in workplace retirement accounts and instructing the Department of Labor to clarify how fiduciaries should evaluate them. On March 31, 2026, DOL published a proposed rule addressing how DC plan fiduciaries satisfy their ERISA duty of prudence when selecting any designated investment alternative. The proposal lists six non-exhaustive factors and pairs them with a process-based safe harbor. The rule aims to ease inclusion of alternatives and mitigate litigation risk. Although the executive order focused on target date funds and other diversified funds, the rule covers any menu option. The comment period closed June 1, 2026, and the rule has not been finalized.
At a June 2026 roundtable convened by the Bipartisan Policy Center, participants including congressional staff, asset managers, plan sponsors, consumer advocates and retirement researchers weighed benefits against risks. Proponents argued that opening DC plans could boost savings, noting that less than 1% of the $14 trillion in DC assets is currently in private markets, though that share has grown. Critics cited higher fees eroding returns. Participants also observed that public markets offer less diversification than before, partly due to consolidation among the largest companies. Even strong supporters agreed private markets are unsuitable for every participant and should remain limited, professionally managed allocations.
Legal uncertainty remained a central concern. Participants questioned whether the proposed rule's safe harbor provides sufficient protection, and some read it as largely restating existing ERISA obligations. Plan size also emerged as a challenge: most DC plans are sponsored by small employers without investment committees or fee-negotiating scale, raising concerns that access could concentrate among large plans. Others argued pooled vehicles narrow that gap because managers, not sponsors, perform selection.
Liquidity was a further point of debate. DC plans require daily transactions, while private assets are slow and costly to sell, so funds for plan menus typically hold liquidity buffers and cap withdrawals. Participants pointed to record withdrawal requests from private credit funds sold to individual investors over the past year, in which investors received less than they requested. Some saw this as evidence of illiquidity under stress, while others noted large funds met requests up to stated limits and that a small allocation within a diversified fund would be more liquid.
The Bipartisan Policy Center concludes that policymakers, plan sponsors, managers and advocates must resolve questions on fees, liquidity, valuation, fiduciary accountability and participant understanding before determining whether private markets can responsibly strengthen retirement outcomes.
In August 2025, President Trump issued an executive order directing efforts to "democratize access" to alternative assets in workplace retirement accounts and instructing the Department of Labor to clarify how fiduciaries should evaluate them. On March 31, 2026, DOL published a proposed rule addressing how DC plan fiduciaries satisfy their ERISA duty of prudence when selecting any designated investment alternative. The proposal lists six non-exhaustive factors and pairs them with a process-based safe harbor. The rule aims to ease inclusion of alternatives and mitigate litigation risk. Although the executive order focused on target date funds and other diversified funds, the rule covers any menu option. The comment period closed June 1, 2026, and the rule has not been finalized.
At a June 2026 roundtable convened by the Bipartisan Policy Center, participants including congressional staff, asset managers, plan sponsors, consumer advocates and retirement researchers weighed benefits against risks. Proponents argued that opening DC plans could boost savings, noting that less than 1% of the $14 trillion in DC assets is currently in private markets, though that share has grown. Critics cited higher fees eroding returns. Participants also observed that public markets offer less diversification than before, partly due to consolidation among the largest companies. Even strong supporters agreed private markets are unsuitable for every participant and should remain limited, professionally managed allocations.
Legal uncertainty remained a central concern. Participants questioned whether the proposed rule's safe harbor provides sufficient protection, and some read it as largely restating existing ERISA obligations. Plan size also emerged as a challenge: most DC plans are sponsored by small employers without investment committees or fee-negotiating scale, raising concerns that access could concentrate among large plans. Others argued pooled vehicles narrow that gap because managers, not sponsors, perform selection.
Liquidity was a further point of debate. DC plans require daily transactions, while private assets are slow and costly to sell, so funds for plan menus typically hold liquidity buffers and cap withdrawals. Participants pointed to record withdrawal requests from private credit funds sold to individual investors over the past year, in which investors received less than they requested. Some saw this as evidence of illiquidity under stress, while others noted large funds met requests up to stated limits and that a small allocation within a diversified fund would be more liquid.
The Bipartisan Policy Center concludes that policymakers, plan sponsors, managers and advocates must resolve questions on fees, liquidity, valuation, fiduciary accountability and participant understanding before determining whether private markets can responsibly strengthen retirement outcomes.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.