Sen. Elizabeth Warren, D-Mass.
In May, Empower, the nation’s second largest 401(k) plan provider, launched a new program that will pave the way for private market investments to be included within defined contribution plans. In June, Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, wrote a letter to Empower’s CEO asking what safeguards the plan provider will put in place to protect Empower’s plan participants who choose to invest in private markets.
Empower’s CEO Edmund F. Murphy III formerly responded to Sen. Warren’s inquiry, in a 3-page letter: “Empower serves more than 19 million Americans, and our mission is clear: to help all individuals— regardless of income or net worth—build lasting financial security through access to well-designed, responsibly managed investment opportunities,” wrote Murphy in a letter to the Senator. “In our view, this should now include carefully structured access to private markets.”
However, Sen. Warren is doubling down on her efforts, following up on her initial letter after Murphy’s initial response failed to adequately answer all her questions about private market investments. “Unfortunately, your response failed to meaningfully explain how Empower’s efforts to invest retirement savings in private funds–which often yield returns on-par with the public market while charging exorbitant fees–will [help your members],” wrote Sen. Warren, in a letter dated July 11.
Empower, which manages $1.8 trillion across 401(k) and other retirement accounts, has aligned with established private markets managers and custodians, including Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard, to offer private investments through collective investment trusts (CITs) later this year. So far, five employers have signed on to offer private investments in their 401(k) plans when they become available in the third quarter.
In her new letter, Sen. Warren is requesting “details of your partnerships with Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group, and Sagard,” including what profits Empower will earn from “your clients’ investments in their products” and “any other details pertinent to your partnerships that may impact your clients’ returns.”
Private market investments “have consistently underperformed as compared to publicly traded indices. Despite these underwhelming results, private funds often charge up to 20 times as much in fees as mutual funds. At the same time, private funds have weak transparency, liquidity, and compliance requirements and lack investor protections,” wrote Ranking Member Warren.
“Like you,” wrote Sen. Warren, “I support providing retirees with robust market access and welcome the opportunity to explore policies that could spur the entrance of new companies into public markets… the companies responsible for investing Americans’ retirement savings should do so in a manner that makes American workers – not private funds – the most money possible. Private fund options for the sake of private fund options … is not a sufficient reason to discount the risk associated with investing in private firms, including private equity funds.”
Related: Empower opens door to private market investments for its 401(k) plan participants
Warren concluded her letter by calling on Empower to respond to its original questions: “Rather than share a survey depicting support for investment in private markets,” which she is referring to Empower’s own Accelerating Access study on private market investments that says 79% of retirement plan participants believe all investors should have access to the same investment products as institutional investors, “I ask again that you answer my questions on how venturing into the private markets will affect your clients.”
Sen. Warren has requested answers from Empower CEO Murphy to her original questions by July 25, 2025.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.