Empower: Workers Desire More Retirement Savings Choices, Better Access

There is increasing demand among American workers for more choice and greater access within their retirement savings options, according to a new study from Empower Retirement LLC, which recently announced its intentions to add private market access to its 401(k) plans.

According to the Accelerating Access study of 2,205 American workers aged 18 and older, including 1,008 employer-sponsored retirement plan participants, 79% of retirement plan participants said they believe all investors should be given access to the same investment products as institutional investors, and 73% agreed that having professionally managed private investments in their plans “helps level the playing field.”

“This research uncovers how American workers are thinking about being able to invest in new ways, outside of public markets,” Empower CEO Edmund F. Murphy said in a statement, noting that even with the great interest in private investing, it is not a route for everyone, but it should at least be an option open to all individuals.

In May, Empower announced a program that allows for private market investments within defined contribution retirement plans. To participate in the program, according to Empower, individuals must be enrolled in plans in which the employer has allowed private investing, and they must engage with an adviser to see whether they are suitable.

This week, in response to an inquiry from Senator Elizabeth Warren, D-Massachusetts, Murphy defended the company’s support for the inclusion of private market investments in defined contribution retirement plans after Warren wrote that it “would likely harm retirees.”

Equal Access for All

According to the survey, 79% of survey respondents said they believe American workers and retail investors should have access to the same investment products as their institutional investor counterparts.

The idea that private investments in 401(k)s and retirement plans can help workers build wealth in ways previously limited to the ultra-wealthy was also popular (74%) among total respondents. Further, 72% of retirement plan participants said they saw diversifying their 401(k)s with some private market investment exposure as a way to “improve their long-term retirement outcomes.”

The access to private investments is also something that 72% of all respondents (64% of Millennials) said would give them confidence that their retirement strategy is “modern and competitive.”

‘A Changing World’

Most (76%) of retirement plan participants said they want their employer or 401(k) provider to offer options that reflect how the investment world, including private markets, is changing.

The study showed that 34% of retirement plan participants said they “would allocate” 10% to 15% of their retirement savings to private investments such as private equity, private real estate and private credit.

Moving forward, 76% of retirement plan participants said they believe expanding 401(k) options to include professionally managed private investments “would be a positive step for retirement savers.”