Private Market Allocations in DC Plans Could Hit $1T
If attempts to include private market exposure in defined contribution plans get off to a strong start, allocations to private investments could reach 6.1% of all DC plan assets, or $1 trillion by 2030, according to new research from Deloitte. Tender offer funds are likely to become the primary vehicle for adding private markets to DC plans, given that their characteristics mesh well with the limited liquidity and longer investment horizons such assets require.
With U.S. private employer retirement plan AUM totaling $11.8 trillion at year-end 2025, even a modest shift in their investment menus toward private asset adoption would yield significant sums, according to Deloitte.
The Trump administration has been pushing for private market investments to be made available to DC plan participants, with SEC Commissioner Mark Uyeda recently arguing that the benefits of including private markets in 401(k) plans outweigh the risks. In March, the U.S. Department of Labor proposed new rules on the use of alternative assets in 401(k) plans, intended to help plan managers avoid litigation. The rules emphasize performing meticulous due diligence before making any allocations to private markets, considering factors such as fund performance, fees, liquidity mechanisms, valuation, performance benchmarks and the complexity of the product. Deloitte researchers view the proposed rules as a sign that private assets are being put “on equal footing on a fiduciary basis, with other investment options in U.S. DC plans.”
The firm estimates that allocation to private assets might reach 6.1% of total assets in DC plans in four years’ time, primarily through target date funds and CITs. Private equity will likely make up the bulk of these allocations, at 43%, followed by real estate (28%), private credit (20%) and infrastructure (9%). In recent months, the financial services industry has already seen this trend taking hold, with multiple alternative asset managers launching new CIT plans that provide private market exposure for DC plan participants through TDFs, managed accounts and other multi-manager investment vehicles. PGIM, Invesco, Goldman Sachs and State Street Global Advisors are among the asset managers that have joined this group.
Deloitte forecasts that DC plans may start seeing meaningful private asset adoption in 2027, with the firm’s baseline predicting total allocations at close to 2% of all assets, or $264 billion next year, and $509 billion in 2028. A more conservative estimate would result in private market allocations in DC plans totaling $63 billion in 2027 and $115 billion in 2028, reaching only $250 billion by 2030.
A survey completed last year by research firm Cerulli Associates estimates that, within a decade, up to one-fifth of DC plans will have some exposure to private markets. Its survey of almost 1,000 retirement plan sponsors found that 37% were very interested in learning more about incorporating private assets, with the highest interest among plans with between $250 million and $1 billion in AUM.
Deloitte researchers warn that adoption of private assets in DC plans may still be stymied by concerns over litigation, high fees and operational complexity. If plan sponsors eschew TDFs in favor of managed accounts to add private market investments, adoption will likely be slower and geared toward larger plans with their more extensive support networks of consultants, advisors and product developers.
“Managed accounts may provide a limited pathway for adoption, enabling controlled allocation within a governed framework, but are unlikely to drive scale in the absence of default-based implementation,” they note.