SEC Commissioner Uyeda Blasts ‘Paternalistic’ Protection of 401(k) Investors

Securities and Exchange Commission Commissioner Mark Uyeda urged policymakers in a November 20 speech to allow 401(k) and other defined contribution plans to invest in private market assets, arguing that denying such access shortchanges U.S. retirement savers. 

Speaking at the Investment Company Institute’s Retail Alternatives and Closed-End Funds Conference in New York, Uyeda said private equity, private credit and other nonpublic investments can improve risk-adjusted returns and diversification for long-term savers.

“Regulation should provide guardrails, not gates,” Uyeda said.

His remarks come as Washington intensifies its focus on private markets in retirement accounts through an August 2025 executive order that directed regulators to provide guidance to improve private market access in defined contribution plans. The SEC’s 2025 examination priorities released last week listed oversight of private fund exposure in retirement and retail investor products among its top focus areas.  

Uyeda said that the lack of exposure to private assets has persisted because of what he called a “paternalistic” approach to investor protection. He cited public pension systems that invest in private market assets, including CalPERS and the Massachusetts Pension Reserves Investment Trust, that have achieved double-digit annualized returns in select one-year periods over the past decade. 

Though illiquidity can obscure risk, illiquid investments come with a premium, Uyeda said, adding that participants in 401(k) plans “do not require daily liquidity and may benefit from the higher expected returns associated with longer holding periods.” 

The commissioner argued that modern portfolio theory and empirical data support private investments in retirement portfolios. “The answer is not zero,” he said. “The absence of access is not the same as the presence of protection.” 

His comments come amid growing debate over the role of private funds in mainstream retirement investing. The SEC has signaled heightened oversight of valuation practices, liquidity management and fee transparency in private markets, warning plan sponsors to ensure they act “with care, skill and diligence” when considering such investments. 

Despite the recent attention, private assets have been eligible for inclusion in retirement plans for years, but uptake has been limited because of the litigation risk plan sponsors face and other factors.  

According to the 2025 PLANSPONSOR DC Plan Benchmarking Report, in 2024, 3.9% of responding plans offered alternative investments, such as private equity, up from 2.2% a year prior. 

The executive order gave regulators like the Department of Labor and SEC until February to provide guidance, but it’ is unclear if the government shutdown may delay the agency’s efforts.  

Still, it is likely that regulators will provide plan sponsors regulatory relief, with many private market proponents, including Republicans in Congress, calling on agencies to provide a regulatory safe harbor for plan sponsors, if they follow federal guidance on the investments’ inclusion.  

Expanding access to private markets “is not only compatible with retirement plans—it enhances them,” Uyeda said, urging regulators to empower fiduciaries rather than restrict them.