Empower to offer private markets investments to retirement plans
Empower Retirement is launching a program to allow retirement plan participants to invest in private markets through defined contribution plans.
The offering will involve fund managers and custodians including Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard, with access provided via collective investment trusts (CITs) that offer limited exposure to private equity, credit, and real estate.
“Empower is making a profound move on behalf of American retirement investors who should have the ability to invest in an asset class that has the potential to diversify their portfolios and offer opportunities for returns in new ways. Like any investment, we believe in the importance of advice and risk mitigation for every investor. These new opportunities offered under an advice model deliver the guardrails necessary to help an entirely new investor class access private investing. We work with 19 million Americans investing for retirement through the workplace retirement system who should have the opportunity to make investments that are outside of public markets. This move is designed to provide more robust retirement options for those who want to take a new approach to their retirement savings.” – Empower President and CEO Edmund F. Murphy III.
Key highlights of the initiative:
- Access to Private Markets Investments: Participants will be able to invest in private equity, private credit and private real estate funds through their workplace plans, gaining access to investment types that were previously limited to institutional investors and ultra-wealth investors.
- Diversification for Retirement Portfolios: Private markets have the potential to provide returns from new investment sources compared to publicly traded equities or bonds. By offering access to private markets, Empower enables retirement plan participants to further diversify their retirement portfolios, potentially altering their risk profile and offering new growth opportunities.
- An Advisory Requirement: Retirement plan participants can only access private market investments through Empower if their employers allow these investments to be made available. Employers must work with an advisor to offer these investments through a managed account platform created in conjunction with Empower. The managed account requirement is offered to match the investment against an individual’s risk tolerance and long-term financial goals, among other factors.
- Enhanced Investment Structure: This offer will complement existing investment choices available in the plan’s investment menu. The private investments offered through private investment managers may be accessed through CITs, a structure that provides limited exposure to pools of private equity, private credit or private real estate providing participants with enhanced liquidity features while helping mitigate fee exposure.
“As a leader in private markets, democratizing alternative investing is one of our firm’s biggest priorities. By offering private market assets through defined contribution plans, we’re providing Americans saving for retirement the opportunity to access to some of the most dynamic and growth-oriented investments available. We’re proud to partner with Empower to help clients build secure and prosperous futures, and we’re excited to be at the forefront of this transformative change in retirement planning.” – Franklin Templeton CEO Jenny Johnson.
