U.S. Defined Contribution Proposed Regulation

In March 2026, the U.S. Department of Labor, through the Employee Benefits Security Administration, released a proposed regulation addressing fiduciary duties in selecting designated investment alternatives for participant-directed defined contribution plans. The proposal establishes a process-based safe harbor intended to clarify how fiduciaries may satisfy ERISA requirements when considering alternative investment strategies, including private markets. The proposed regulation is the latest development in the regulatory framework governing retail investors’ access to private markets.

While the proposal is directed at defined contribution plan fiduciaries, its potential effects extend across the private markets ecosystem and to institutional limited partners (LPs). The rule raises questions regarding structural fit, fiduciary readiness, and market health as private markets exposure is integrated into participant directed frameworks with distinct liquidity, transparency, and oversight needs.

In June 2026, ILPA submitted a comment letter on the proposed regulation, drawing on the knowledge and perspective gained from our work empowering LPs and actively advancing stronger governance, transparency, and alignment of interests between LPs and GPs across private markets for nearly 25 years.

The comment letter highlights our view on where the process-based safe harbor would benefit from further clarification and closer consideration across the six factors (and beyond): performance, fees, liquidity, valuation, performance benchmark, and complexity.

The analysis below provides additional detail on the proposed regulation and its implications for LPs and private markets.