SEC to Evaluate Use of PE and Alternatives in Retirement Accounts

The U.S. Securities and Exchange Commission’s Office of the Investor Advocate will explore the growing use of private equity and other alternative investments in retirement accounts, it announced as part of its fiscal 2026 report on the office’s objectives, released June 25.

The office has previously highlighted potential risks for retail savers posed by the expansion of private market products within defined contribution retirement plans, such as 401(k) and 403(b) plans.

The report noted that while private markets may offer opportunities for diversification and returns, their inclusion in retirement savings plans—particularly through target-date funds and managed accounts—also raises important investor-protection concerns.

According to the agency, which includes identifying problems with investment products among its key functions, the risks to be evaluated include reduced, incomplete or unreliable disclosures; limited liquidity; and a greater risk of fraud or investment loss. The investor advocate plans to explore how these risks intersect with fiduciary responsibilities under the Employee Retirement Income Security Act of 1974.

In fiscal 2026, the investor advocate intends to continue its work by evaluating whether plan participants are adequately informed about the nature of these investments and the potential trade-offs involved.

The focus on private equity is part of a broader agenda outlined in the investor advocate’s report. It also includes efforts to enhance the accessibility of disclosures for retail investors, evaluate rule proposals by self-regulatory organizations and support data-driven regulation through investor research. Additional priorities include investor testing of disclosures, analysis of China-based variable interest entities and collaboration with the SEC’s newly formed crypto task force.