Private assets in DC plans: What’s changed? What’s next?

Investment capabilities in defined contribution (DC) plans are entering the next phase of their evolution. As innovation in private markets accelerates and policy shifts signal a more supportive regulatory backdrop, DC plan sponsors and their advisors are increasingly asking not whether private asset integration is possible, but whether it is practical, prudent, and aligned with participant goals.

We believe that a broader investment universe—one that includes certain private asset classes—can offer better outcomes for plan participants, particularly when accessed through well‑constructed, professionally managed multi‑asset solutions. However, from the investment case to operational considerations, properly evaluating opportunities for private asset exposure requires a thorough understanding of the current landscape and what may come next.

What hasn’t changed?

Persistent retirement headwinds

The primary challenge of DC plan investing remains the same: helping participants accumulate enough assets for a confident retirement that can last decades. The structural pressures facing retirement savers—including insufficient savings rates, the financial effects of increased life expectancy, and the persistent erosion of purchasing power—have not eased. If anything, they have intensified (Figure 1).

These realities mean that investment strategies must do more of the heavy lifting to help participants reach their retirement goals.

Evolution in multi‑asset capabilities

The evolution of multi‑asset retirement portfolios reflects this enduring challenge. Since becoming the dominant qualified default investment alternative (QDIA), target date solutions have expanded well beyond their foundational stock‑and‑bond allocations. Portfolio construction has become more sophisticated to incorporate additional asset classes, refined glide paths, and broader sources of risk‑adjusted returns that can potentially enhance diversification and improve durability across market environments (Figure 2).

The ability to incorporate private assets as building blocks in target date and other multi‑asset solutions represents a continuation of this tradition. The need for growth, diversification, and thoughtful risk management has not changed. What has—and what will likely continue to evolve—is the opportunity set available to pursue these objectives.

The need for demonstrable value

The suitability of private assets in DC plans has at times been debated. However, the fundamental value proposition has remained consistent: the potential to enhance diversification and returns.

Ultimately, private assets must earn their place in DC plan portfolios. We believe that any allocation, whether public or private, should demonstrate unique net‑of‑fee benefits within the context of the broader portfolio. Inclusion should improve expected participant outcomes in a measurable way, without undermining liquidity management, fee discipline, or fiduciary responsibility.

What has changed?

A shifting investment landscape

Public markets today look different than they did a generation ago. Equity indices have become increasingly concentrated, with a growing share of returns driven by a small number of large companies. At the same time, the number of publicly listed firms has declined, as many companies have opted to access capital outside traditional exchanges and stay private longer (Figure 3a). Debt markets have also experienced structural changes, shaped by institutional demand dynamics and the availability of customized financing outside traditional bond sectors.

Meanwhile, private markets have surged in size and scope (Figure 3b). Private equity, private credit, infrastructure, and direct private real estate now represent a significantly larger portion of the global investable universe than they did two decades ago. For long‑term investors, this shift raises an important strategic question: whether excluding private markets limits access to meaningful segments of economic growth.

Diminishing structural barriers

The regulatory and product landscape is also evolving. Private assets have long played a role in many DC plans, for instance through equity strategies that tactically invest in companies prior to their public listing. However, uncertainty around regulatory interpretation and potential litigation risk has curbed broader integration of private assets.

More recently, policy moves and industry engagement have signaled greater willingness to address these barriers. Structural innovation—such as evergreen funds, which offer periodic liquidity and long‑term exposure to private markets—has made private asset integration more operationally compatible with DC requirements, including daily valuation and participant transactions.

Taken together, these developments are reshaping the feasibility conversation. The DC industry is increasingly focused on real‑world implementation, carefully assessing how private assets may fit within diversified, professionally managed multi‑asset solutions.

The investment case for private assets

Introducing private asset allocations in target date portfolios offers additional tools to pursue diversification and return objectives.

Private equity, private credit, infrastructure, and private real estate each introduce differentiated return drivers.

• Private equity offers exposure to value creation that often takes place before companies enter public markets.
• Private credit can provide negotiated income streams that differ structurally from traditional fixed income.
• Private infrastructure can provide steady income with lower exposure to economic cycles and a potential inflation hedge.
• Private real estate can boost income generation and help cushion against inflation.

When combined thoughtfully with public equities and bonds, these exposures can add diversification benefits due to differences in economic drivers and market dynamics.

What’s next?

Evaluation on the part of investment managers and plan sponsors must be rigorous. Appraisal‑based valuations can smooth reported volatility in private markets, but investment managers should acknowledge the underlying economic risk and understand true correlations, particularly in stressed environments. Moreover, manager performance dispersion in private markets has been pronounced, making skilled active management and disciplined due diligence critical to outcomes.

In the context of target date solutions, providers are generally responsible for selecting which private market allocations meet the threshold for inclusion and for underlying manager selection, while plan sponsors/fiduciaries and/or their consultants and advisors retain responsibility for selecting the target date provider.

Plan sponsor interest varies by plan size

Our survey data and industry engagement suggest that interest in private assets is real but measured (Figure 5). Plan sponsors and consultants consistently cite diversification and return enhancement as primary objectives when evaluating private asset strategies. At the same time, implementation appetite varies across different private market exposures and by plan size.

In our research, private credit emerges as the most likely private asset to be implemented, selected by 43% of plan sponsor respondents.

• Despite increased headline risk around private credit today, our Target Date team agrees with the plurality of plan sponsors that a structural allocation to private credit is appealing as a source of income with lower volatility than public market alternatives.
• Furthermore, private credit is typically viewed by consultants and plan sponsors as a reasonable entry point for incorporating private markets exposure in DC plans.
• We observe differences, however, when we segment the plan sponsor population by plan assets.
• Plans with less than $1 billion in assets are more likely than their larger counterparts to anticipate integration of private equity and, to a lesser extent, other alternatives such as cryptocurrency. While cryptocurrency is part of the broader DC discussion around alternative investments, our T. Rowe Price Target Date team similarly views it as the least likely to be implemented in target date portfolios.
• In contrast, plans with more than $1 billion in assets are more likely to anticipate integration of private credit and direct real estate.
• Regarding direct real estate, we’ve already seen implementation in the mega plan market, particularly within custom target date strategies.

Importantly, fees, liquidity constraints, benchmarking challenges, and litigation risk are identified as top barriers to implementation (Figure 6). While many plan sponsors see the possible benefits of offering DC plan investments that include exposure to private assets, they are seeking clarity on these aspects and expect them to be sufficiently addressed.

Final thoughts: From concept to implementation

If private assets are to widely gain traction in DC plans, their implementation vehicle will matter as much as their investment case. The strongest consensus points toward professionally managed, multi‑asset solutions—particularly target date strategies and, to a lesser extent, managed accounts—as the most practical entry points. These structures centralize governance, manage liquidity within a diversified framework, and reduce the risk of participant misuse associated with stand‑alone options.

For plan sponsors, the evaluation of private assets ultimately returns to fiduciary fundamentals. Any allocation must be assessed for its potential contribution to participant outcomes, its value proposition, and its operational feasibility. Liquidity management, manager selection, cost reasonableness, and participant communication all require careful consideration. Additionally, within the context of target date solutions, it is important to understand the role the private market building block is expected to play and how it evolves across a glide path to align with participants’ investment objectives and time horizon to retirement.

As policy discussions evolve and product innovation continues, prudence remains the guiding principle. The integration of private assets, if pursued, should reflect a documented, research‑driven process grounded in participant best interests, consistent with how fiduciaries evaluate any other investments offered in a DC plan. The opportunity is compelling, but fiduciary discipline remains non‑negotiable. Portfolio durability, liquidity management, cost discipline, and governance standards must remain intact.

 

Appendix: Study methodology

T. Rowe Price DC Plan Sponsor Retirement Trends Study: The survey was fielded from October 21–December 4, 2025. Data reflect responses from 136 plan sponsors that have a role in overseeing and/or selecting their organization’s DC plan investment offerings. Survey respondents were not aware that the research was sponsored by T. Rowe Price, and they are not necessarily T. Rowe Price clients. 

T. Rowe Price Defined Contribution Consultant Study: The study was fielded from January 13–March 10, 2025. Participating in the 2025 study were 36 of the leading consultant and advisor firms (81% consultant and 19% advisor, based on self-identification of firm types) with over 136,000 DC plan sponsor clients and representing nearly $9 trillion in assets under advisement (AUA), based on self‑reported figures.

T. Rowe Price Global Retirement Savers Study (GRSS): The 2025 GRSS surveyed 7,010 adults age 18+, representative of the population of workers (on age, gender, and region) contributing to a defined contribution (DC) or similar account‑based workplace retirement plan. 1,000 (or slightly more) adults per market were surveyed, except in the U.S., where 3,001 adults were surveyed. The data are weighted to provide equal representation across all countries.