Private Equity Sets Its Sights on America’s Retirement Savings

In the high-stakes world of investing, few assets are as coveted as the $12 trillion held in U.S. 401(k) retirement plans. Historically reserved for mutual funds, ETFs, and bonds, these accounts are now being targeted by private equity firms as the next frontier. With traditional sources of capital drying up and the private equity market ballooning to over $24 trillion in assets under management, firms like Apollo, Blackstone, and KKR are lobbying hard to gain access to this massive pool of retirement savings. But their entry into the 401(k) ecosystem is starting a fierce debate among economists, policymakers, and fiduciaries over whether such a move serves the best interests of everyday Americans.

Private equity, an investment class once limited to institutional players like university endowments and pension funds, remains a minuscule part of defined contribution plans, less than 1% as of late 2024. Despite this, the industry is bullish on its expansion. Marc Rowan, CEO of Apollo Global Management, told investors earlier this year that “the results are not just a little bit better, they’re 50% to 100% better” when private investments are incorporated into retirement portfolios (Dhue & Epperson, 2025). Advocates argue that private equity can offer greater diversification and higher long-term returns compared to traditional public equities.

However, the push into 401(k) plans is occurring as private equity firms face a capital drought from their traditional investor base. According to PitchBook analyst Kyle Walters, “The only option is to kind of reach out to a new channel” like individual retirement accounts and 401(k) plans, which collectively house more than $12 trillion (McKenna, 2025). That shift coincides with a broader decline in the number of publicly traded companies, now just 13% of U.S. firms with over $100 million in annual revenue, leaving fewer public investment opportunities and potentially strengthening the argument for private equity inclusion.

Despite these trends, critics raise serious concerns. Chief among them are liquidity, transparency, and cost. Unlike stocks or mutual funds, private equity investments often require capital to be locked up for a decade or more, which may not suit the financial needs of the average 401(k) participant nearing retirement. “It’s typically not easy to cash out the assets in a hurry,” noted Olivia Mitchell of the University of Pennsylvania, emphasizing the potential mismatch between PE’s structure and the liquidity expectations of retail investors (Dhue & Epperson, 2025).

Ultimately, private equity’s encroachment into 401(k) plans reflects a broader transformation of the investment landscape. As public markets shrink and private markets grow in scale and influence, the pressure to offer new avenues for returns is mounting. But whether these strategies will deliver long-term benefits for everyday Americans, or merely enrich fund managers, remains a contentious question. For now, the stakes couldn’t be higher, and the debate is far from over.

Sources

Dhue, Stephanie, and Sharon Epperson. “Private Equity Wants a Larger Piece of the $12.5 Trillion Workplace Retirement Plan Market.” CNBC, 11 Mar. 2025, https://www.cnbc.com/2025/03/11/private-equity-wants-a-larger-piece-of-workplace-retirement-plan-assets.html.

McKenna, Greg. “Private Equity Wants the $12 Trillion Americans Have Stashed in Their 401(k) Plans.” Yahoo Finance, 3 Apr. 2025, https://finance.yahoo.com/news/private-equity-wants-12-trillion-112400084.html.