over a 30- or 40-year career, is not a rounding error — it could be the dif- ference between financial security and financial anxiety in retirement. Long-term data reinforce the case.
Private equity has outperformed pub- lic markets across 5-, 10-, 15-, and 20-year time horizons. This reflects the structural advan-
tages of patient, active ownership: pri- vate equity managers make operation- al improvements and long-term invest- ments that quarterly earnings pressure makes difficult for public companies. The result is stronger returns for
investors willing to commit capital over time — precisely the profile of a retirement saver. Private credit adds another layer
of value. Unlike stocks, it generates returns through lending — providing capital to businesses in exchange for regular interest payments. The International Monetary
Fund’s 2024 Global Financial Stabil- ity Report found companies backed by private investment experienced lower default rates, even during peri- ods of economic stress, underscor- ing the resilience these assets bring to a retirement portfolio. Georgetown’s Center for Retire-
ment Initiatives found that adding just a 10% private market allocation across all defined contribution assets would generate $5 billion in additional retire- ment savings annually. For individual workers, that means meaningfully higher account balances and a stronger financial cushion as Social Security’s long-term solvency remains uncertain. As public markets grow more con-
centrated — dominated by a handful of mega-cap technology companies — the diversification case grows stronger. A 401(k) heavy in index funds is,
in practice, a large bet on a small number of stocks. Private mar- ket exposure spreads risk across a broader range of companies, indus- tries, and economic structures. Critics raise three main objections. First, that private investments under-
The result is stronger returns for investors willing to commit capital over time, precisely the profile of a retirement saver.
performance reporting, mandatory annual audits, and rigorous scrutiny of adviser conflicts of interest. There are also questions of fidu-
ciary liability. Trump’s executive order addresses these directly, noting regula- tory overreach and litigation threats “stifled investment innovation” and prevented plan sponsors from offering employees access to superior invest- ment options. Clarifying that legal landscape is
the essential predicate for making this reform real. Polling shows strong public support
for expanding access, with majorities saying private investments can help workers build wealth. More than 90 million Americans participate in employer-sponsored defined contribution plans. They should not be consigned to
a narrowing pool of public market investments while wealthier inves- tors and government workers access the full opportunity set of modern financial markets. There is a certain irony in the fact
perform stocks and hurt retirees. The data say otherwise. Private investments outperformed
the S&P 500 stock market across every major long-term time horizon, and because private returns are not correlated with public markets, they can hold value when stocks fall — reducing overall portfolio risk rather than adding to it. Second, skeptics worry public pen-
sions invested in private equity have suffered for it. The National Associa- tion of State Retirement Administra- tors reports the opposite: higher rates of return for public pensions driven by increased allocations to private invest- ments. Their experience is the stron- gest argument for expanding access, not restricting it. Third, some worry private invest-
ments lack transparency and investor protections. In reality, they operate under a reg- ulatory framework requiring quarterly
that the workers who build the com- panies driving private market returns have been among the last to share in those gains. A factory worker whose company is
acquired by a private equity firm might see his employer become more produc- tive and more profitable — while his 401(k) sits in index funds with no expo- sure to the growth he helped generate. Expanding 401(k) access to private
markets will not solve every retirement challenge Americans face. But it is a concrete, well-supported, data-backed step toward a more secure retirement future for millions of families. All workers deserve the freedom
to make the same investment choices that serve public pension beneficiaries and wealthy investors so well.
Carrie Sheffield is a senior policy analyst for the Center for Economic Opportunity at the Independent Women’s Forum and author of Motorhome Prophecies: A Journey of Healing and Forgiveness.
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