GAO says DOL can prepare for expected private equity growth in 401(k) plans

The Government Accountability Office said on Tuesday 10 November 2026 that the Department of Labor can prepare for expected growth in private equity investment options for 401(k) plans.

GAO’s review of selected research papers found no consensus on the performance of private equity relative to publicly traded equity. The review also found differences in the data analyzed, performance benchmarks and methodologies used by the papers.

One group of papers found that private equity funds outperformed publicly traded equity for the samples and time periods studied, but the size of the overperformance varied widely. One paper’s benchmarks did not include a risk premium. Another group found that private equity funds underperformed publicly traded equity after accounting for underlying risk or fees, which can be higher for private equity products.

GAO found no consensus on how to benchmark private equity performance. Financial regulations require open-end management investment companies that report performance data to include a benchmark based on the average annual total returns of an appropriate broad-based securities market index. The review found a range of private equity benchmarks, including publicly traded equity indexes and custom indexes.

Plan sponsor and industry association representatives told GAO that sponsors need education on private equity valuation and how it differs from traditional investments. Consumer organization representatives said participants should understand private equity’s illiquidity. GAO found that the Department of Labor had not issued specific guidance for either group on these and other basic aspects of private equity.

Under the law, the Department of Labor may issue regulations and other guidance to promote retirement security. GAO said guidance for plan sponsors and participants could help them understand private equity as investment options grow. GAO also said little was known about how extensively private equity is used in 401(k) plans and how its use is communicated.

GAO examined private equity performance research and communications to 401(k) plan sponsors and participants. The agency analyzed available federal and private data sources, reviewed selected research papers and disclosures, and interviewed industry representatives, consumer advocates and officials from the U.S. and four countries.