Defined contribution (DC) plans now dominate the U.S. retirement landscape. With more than $12 trillion in assets and growing, DC plans have eclipsed private-sector defined benefit (DB) pensions as the primary vehicle for retirement savings. Yet despite pursuing the same end goal — income replacement in retirement — DC and DB plans remain meaningfully different in how they allocate capital, particularly to private real estate.
Institutional DB plans have long relied on private real estate to generate income, dampen volatility and improve risk-adjusted returns. DC plans, by contrast, continue to rely overwhelmingly on publicly listed REITs. The divergence is striking given that nearly 90 percent of U.S. commercial real estate is privately held, while listed REITs represent a relatively small slice of the investable universe.
So why has private real estate remained underrepresented in DC plans — and why is that beginning to change?
Perceived barriers
