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Retirement

Unlocking the potential of private investments in DC plans

Download research paper

Nearly a decade ago, Nuveen recognized that participants deserved access to the full spectrum of investment opportunities and was one of the first asset managers to integrate private real estate into our target date funds. Today, we remain committed to the pioneering approach of driving better retirement outcomes for participants by increasing access to private investments.

With that in mind, we are proud to partner with Cerulli and DCALTA on research that examines opportunities—and dispels myths—associated with incorporating private market assets in defined contribution plans.

The research represents a great step forward in the conversation about this significant area of development for DC plans.

Download the full PDF to read more

Stakeholders across the DC ecosystem are driving the adoption of private markets. Buoyed by tailwinds from within and outside the industry, the interests of asset managers, plan sponsors, intermediaries, participants, and others are increasingly aligned around the inclusion of private investments in DC plans.

Meanwhile, providers are developing solutions that are operationally feasible by allocating to private markets investments within target date funds or managed accounts. This approach provides participants with access via familiar, professionally managed structures rather than using standalone options. 

And, while the industry is poised to overcome many hurdles to adoption, several misconceptions remain.

Dispelling myths about private markets.

For a successful integration of private markets assets into DC plans, the industry must overcome several myths.

Myth 1: Plan participants will invest directly in private equity via the plan menu

Reality: Private markets products will not be standalone products

Participants will only access these investments through a participant investment option such as a target date fund or managed account—and will not be on their own to decide whether and how to invest.

Myth 2: Private markets are illiquid 

Reality: Asset managers are working to enable levels of liquidity typical in DC plans

Semi-liquid funds may be used as a base for private markets exposure, and providers are developing ways to provide liquidity within the participant investment options offered on DC menus.

 

Myth 3: Including private market assets in a plan increases the risk of being sued for a fiduciary breach 

Reality: Regulatory guidance may lead to a range of options that are in accordance with ERISA standards

Private markets education is expected to boost confidence among plan sponsors, while the risk of litigation is expected to increase oversight—and litigation risk may even shift to plans that do not offer access.

Myth 4: Private market assets are not valued daily, making them unsuitable for DC plans 

Reality: Procedures are being implemented to provide accurate, up-to-date reporting

Processes are being developed to allow for a daily NAV, and because private market assets are expected to be a small portion of DC plans, the risk of individual valuation shifts is low.

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Contact us
Brendan McCarthy
Brendan McCarthy
Head of Retirement Investing, Nuveen
Craig Maalouf
Craig Maalouf
Managing Director, Nuveen Retirement Investing
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