Prioritizing DC plan participant outcomes with private real estate

U.S. defined benefit (DB) plans exhibit significantly higher allocations to private real estate compared to defined contribution (DC) plans, with DB plans accounting for 42.8% and DC plans only 4.7% of assets under management among private real estate investment managers in 2023. The disparity arises as DC plans predominantly invest in publicly listed real estate investment trusts (REITs) rather than private real estate.

This may hinder participant outcomes and optimal portfolio diversification. The analysis highlights the potential benefits for DC plan sponsors to include private real estate as an investment option within multi-asset retirement plans to enhance overall performance and income replacement in retirement.