Over 60 million Americans have assets in defined contribution 401(k) plans, which cumulatively measure over $7 trillion . These assets constitute the largest source of workers’ future retirement income. Currently, 401(k) plan managers direct fund assets mostly to investments in public capital markets instruments—mainly stocks and bonds. But historically, investments in private markets, such as limited partnerships in private equity funds, have delivered higher returns than public markets. Should fund managers be allowed to include some allocation to alternative investments, such as private equity, hedge funds and real estate? If the door is opened for such investments, retirees could build more wealth to finance their retirement years. There are risks, however, to private investments. These include limited transparency, potentially lower liquidity and added liability exposure for financial managers acting as fiduciaries for their investors.
We invite you to an online discussion about the pros and cons of defined contribution plans including alternative assets, and the position of the Department of Labor, which oversees pension plans through the enforcement activity of the Employee Retirement Income Security Act. The discussion features Jesse Fahy of Preqin and R Street’s Jerry Theodorou and Caroline Melear.
- [Moderator] Jerry Theodorou, Director, Finance, Insurance & Trade Program, R Street Institute
- Jesse Fahy, Vice President, Private Capital, Preqin
- Caroline Melear, Resident Fellow, Finance, Insurance & Trade Program, R Street Institute
- “$7 trillion”: https://www.ici.org/401k#:~:text=401(k)%20plans%20hold%20%247.3,of%20former%20employees%20and%20retirees.