FOR IMMEDIATE RELEASE: July 2, 2026
CONTACT: Jarice Thompson, jarice@ourfinancialsecurity.org
New Analysis Finds 401(k)s Without Alternative Assets Significantly Outperformed Pension Plans Loaded with Private Equity and Other Alternative Assets
Washington, D.C. — Today, Americans for Financial Reform Education Fund (AFREF) and the law firm Engstrom Lee released a new report, that found that defined contribution retirement plans like 401(k)s, with virtually no exposure to private equity or other alternative assets, have outperformed defined benefit pension plans with substantial allocations to those investments. The study examined the empirical performance of 58,000 retirement plans—pension plans and 401(k) plans—over sixteen years between 2009 to 2024 and found clear outperformance by the plans without alternative assets.
The report debunks Wall Street claims and the White House’s flawed analysis about the financial performance of alternative investments used to justify opening 401(k)s to risky, illiquid, costly, and unstable investment options. The report identifies the outdated and flawed methodologies used by proponents to falsely argue that private market investments would benefit retirement savers. The report’s data demonstrates that private market investments have not outperformed the cheaper, simpler public market retirement investments over the past decade and a half.
“The 401(k) plans which hold no alternative investments have significantly outperformed pension plans, which are chock full of private equity and hedge fund investments,” said Carl Engstrom, founder and partner at Engstrom Lee, LLC. “This is by far the most comprehensive and most up-to-date analysis of retirement plan performance and.”
Among the report’s key findings:
- Using U.S. Department of Labor (DOL) Form 5500 data from 2009 through 2024, defined contribution plans (better known as 401(k) plans) returned an average of 9.13 percent per year, compared with 7.79 percent per year for defined benefit plans (better known as pension plans).
- Workers whose savings grew at the average defined contribution rate accumulated approximately 22 percent more retirement wealth than those whose savings grew at the average defined benefit rate because of the 134-basis-point annual return gap between defined contribution and defined benefit plans compounded over time.
- The defined contribution advantage persists across 5-year, 10-year, and 16-year periods, and holds on every computed measure of risk-adjusted return.
- When the comparison is limited to large plans with more than $1 billion in assets, defined contribution plan financial outperformance widens to 168 basis points annually over the 16-year period.
“The private equity industry wants to dump its underperforming assets onto unsuspecting workers saving for retirement, but the Wall Street emperor has no clothes,” said Oscar Valdés Viera, Senior Policy Analyst for Private Equity and Capital Markets at AFREF. “The evidence shows that exposing workers 401(k)s to private equity and crypto products will needlessly undermine people’s retirement security. The administration plan is nothing more than a regressive bailout of the private equity industry.”
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