Blackstone, UBS Group, and Neuberger Berman, alongside over 30 asset managers, convened to discuss the expansion of private equity within US retirement savings less than a week before former President Donald Trump’s second inauguration, according to a Bloomberg report.
Discussions centred on integrating private equity into 401(k) plans, including its inclusion within default investment options. Currently, fewer than 10% of 401(k) plans offer alternative investments, with private equity featuring in just 2.4%, according to the American Retirement Association.
With Republican control of both the White House and Congress, industry participants view this as a pivotal opportunity to access the $12tn held in employer-sponsored retirement plans – most of which remains beyond the reach of alternative asset managers.
Senators Tim Scott, Chair of the Senate Banking Committee, and Bill Cassidy, Chair of the Committee on Health, Education, Labor and Pensions, have signalled openness to discussions, building on groundwork laid by former Senator Pat Toomey, who previously championed legislative efforts to provide corporate plan sponsors with legal clarity on private equity inclusion, and has since joined the board of Apollo Global Management.
Meanwhile, private equity firms are lobbying the Securities and Exchange Commission (SEC) to raise the 15% cap on illiquid holdings in mutual funds. A revision could facilitate greater private equity allocations in target-date funds, a default investment vehicle adjusting risk exposure as participants near retirement.
The push comes amid a challenging fundraising environment, with capital commitments from traditional pension clients slowing and higher interest rates constraining exit opportunities through IPOs and asset sales.
Expanding into the 401(k) space aligns with a broader private equity strategy to engage retail investors, who Bain & Co projects could account for 22% of private equity assets by 2032, up from 16% in 2022.
