Empower Retirement Plan is undergoing a major transformation in 2025 as the company launches access to private market investments for retirement savers. With over 19 million participants already relying on Empower for their retirement needs, this move opens the door to options once reserved only for institutional investors and ultra-wealthy individuals. By integrating private equity, real estate, and credit into defined-contribution plans, Empower is positioning itself at the forefront of a new era in retirement planning.
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The Evolution of the Empower Retirement Plan
The Empower Retirement Plan has long been known for offering traditional 401(k) and workplace retirement solutions. Participants typically chose between mutual funds, index funds, and target-date funds. While effective, these choices often limited savers to public market assets—stocks and bonds—whose returns can fluctuate dramatically during economic downturns.
Now, Empower is shifting toward a more diversified retirement ecosystem. By introducing private investments into retirement plans, the company is addressing a long-standing demand: access to asset classes that historically delivered strong returns for institutions like pension funds and university endowments.
This change signals not only innovation but also a broader debate about how much risk average retirement savers should bear when it comes to complex, less liquid investments.
Key Points Summary
- Expansion: Empower Retirement Plan adds private equity, private credit, and real estate options.
- Access: Available through managed accounts and collective investment trusts (CITs).
- Support: Backed by a broader policy push to diversify retirement options.
- Concerns: Critics cite risks, higher fees, and fiduciary challenges.
- Impact: Could reshape how millions of Americans build their retirement savings.
Why Empower Is Opening Access to Private Markets
Several driving forces explain why Empower is expanding its plan offerings:
- Demand for Higher Returns – Public markets have been increasingly volatile. Private assets historically offer potentially stronger, long-term returns.
- Changing Retirement Needs – With longer lifespans and rising healthcare costs, retirees require strategies that outperform inflation and provide steady income.
- Leveling the Playing Field – Empower argues that middle-class retirement savers deserve the same investment opportunities previously available only to institutional investors.
- Policy Momentum – Recent government actions are pushing regulators to expand the range of allowable assets in workplace retirement accounts.
How Empower Retirement Plan Will Deliver These Investments
The expansion is not as simple as adding private equity funds to a participant’s dashboard. Empower has designed structured pathways to make private markets more accessible and less risky:
- Managed Accounts – Participants enrolled in managed accounts may be automatically allocated a portion of private assets, based on risk profile and retirement goals.
- Collective Investment Trusts (CITs) – These pooled investment vehicles reduce complexity, offer better liquidity, and aim to control fees.
- Strategic Partnerships – Empower has partnered with leading global investment managers specializing in alternatives, ensuring participants gain exposure to high-quality opportunities.
By layering in these structures, Empower hopes to balance innovation with risk management.
Advantages of the New Empower Retirement Plan
For participants, the changes bring significant opportunities:
1. Diversification Beyond Stocks and Bonds
Traditional 401(k) plans typically concentrate on public equities and fixed income. Private markets can reduce reliance on these sectors, especially in times of volatility.
2. Potential for Higher Long-Term Returns
While private assets are riskier, they have historically provided stronger long-term gains compared to traditional funds.
3. Broader Access for Everyday Investors
Empower’s changes make it possible for millions of Americans to access institutional-level investments, helping close the gap between Wall Street and Main Street.
4. Professional Oversight
By embedding private market exposure within managed accounts, participants gain diversification without needing to analyze complex investment strategies on their own.
Risks and Concerns Facing Empower Retirement Plan Participants
Not all reactions have been positive. Critics warn of several challenges:
- Fee Transparency – Private investments often come with layered management and performance fees, making it harder to evaluate cost-effectiveness.
- Liquidity Issues – Unlike public stocks, private assets cannot always be sold quickly. This could create mismatches if participants need to withdraw money.
- Valuation Challenges – Pricing private investments is less straightforward, raising questions about accuracy.
- Regulatory & Fiduciary Duties – Employers sponsoring plans must ensure they comply with legal obligations when offering riskier investments.
- Potential Conflicts of Interest – Lawsuits have raised concerns about whether data from retirement savers could be used to push them into higher-cost products.
The Regulatory Debate Around Empower Retirement Plan
The decision to allow private investments in retirement plans has sparked intense debate among policymakers, regulators, and industry experts.
- Supporters argue that diversification is essential for modern retirement security. By granting access to private assets, workers can potentially enjoy the same benefits as large pension funds.
- Critics fear that retail investors may not fully understand the risks involved and could end up with poor outcomes if markets turn volatile.
- Regulators are now tasked with creating clear guidelines to protect participants while still allowing innovation. This includes potential safe-harbor provisions for employers who adopt these changes.
Impact on Employers and Plan Sponsors
Employers who use Empower to manage retirement benefits will face important decisions:
- Adoption Choice – Employers must decide whether to add private investments to their retirement plans.
- Employee Education – Clear communication will be essential to help participants understand new options.
- Compliance Risk – Sponsors must ensure they are meeting fiduciary standards to avoid litigation.
- Competitive Advantage – Companies offering diversified plans could gain an edge in attracting and retaining employees.
What Participants Should Watch For
Retirement savers enrolled in Empower plans need to carefully monitor the following:
- Whether their employer adopts the new private investment options.
- How much of their portfolio may be automatically allocated to private assets.
- The fee structure compared to traditional investment funds.
- Performance data and transparency provided by Empower and partner managers.
- The degree of risk tolerance they are comfortable with, especially as retirement age approaches.
Broader Implications for the Retirement Industry
The Empower Retirement Plan’s shift may set a precedent for other providers. If successful, competitors like Fidelity, Vanguard, and Principal may adopt similar strategies, accelerating a trend toward alternative assets in mainstream retirement planning.
This could reshape the retirement industry by:
- Normalizing Alternatives – Making private markets a standard feature of retirement plans.
- Increasing Regulatory Oversight – As more savers gain exposure to private assets, regulators will likely tighten supervision.
- Changing Investment Education – Financial literacy programs may need to expand to cover private market concepts.
Global Comparisons: Retirement Plans and Private Assets
Empower’s approach aligns with international trends:
- Canada – Pension funds like CPP Investments heavily invest in private equity and infrastructure, generating strong long-term returns.
- Australia – Superannuation funds have embraced private assets as a core allocation.
- Europe – Some retirement systems integrate alternatives, though with stricter oversight.
Empower’s expansion may help the U.S. catch up with these global models of diversified retirement investing.
Table: Pros and Cons of Empower Retirement Plan’s Expansion
| Pros | Cons |
|---|---|
| Greater diversification beyond stocks and bonds | Higher fees and less transparency |
| Potential for stronger long-term returns | Liquidity challenges and valuation risks |
| Access to institutional-grade investments for average savers | Complex strategies may confuse participants |
| Professional oversight via managed accounts | Employers face added fiduciary risks |
What Comes Next for Empower Retirement Plan
The rollout of private market investments is expected to take place gradually throughout 2025. The pace will depend on:
- Employer Adoption Rates – Not all employers will immediately opt in.
- Regulatory Clarity – Guidance from regulators will shape the extent and pace of adoption.
- Litigation Outcomes – Ongoing legal cases may influence how Empower structures future offerings.
- Participant Reception – Empower will closely monitor how individuals respond to these changes, particularly in terms of participation rates and feedback.
Conclusion
The Empower Retirement Plan is entering uncharted territory by bringing private markets into mainstream retirement saving. For participants, this could mean stronger long-term growth and diversification—but also new risks that require caution and oversight.
The future of retirement investing is shifting, and Empower has positioned itself at the center of this transformation. Whether this becomes a model for the entire industry or sparks ongoing controversy will depend on how participants, employers, and regulators respond in the months ahead.
Do you see private markets as a game-changer for retirement savings, or do the risks outweigh the benefits? Share your perspective below and join the conversation.
FAQ
Q: When will participants see private investment options in their Empower Retirement Plan?
A: The rollout is expected later in 2025, depending on employer adoption and regulatory clarity.
Q: Are private investments suitable for all retirement savers?
A: Not necessarily. They carry higher risks and fees, so suitability depends on an individual’s risk tolerance and retirement goals.
Q: Will Empower Retirement Plan participants pay higher fees?
A: Yes, private investments usually cost more, though Empower has promised to limit fee exposure through structured products.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or tax advice. Always consult a qualified professional before making investment decisions.
