Empower Retirement has entered into a definitive agreement to acquire Prudential Financial’s retirement plan recordkeeping and administration business in a deal valued at $3.55 billion, the companies announced today.
The transaction is expected to close in the first quarter of 2022, pending regulatory approvals, according to a news release. It will boost Empower’s participant base to 16.6 million people and its retirement services recordkeeping assets to about $1.4 trillion administered in about 71,000 workplace savings plans, the release said.
Once the deal is sealed, Empower will get Prudential’s defined contribution, defined benefit, non-qualified and rollover IRA business, in addition to its stable value and separate account investment products and platforms, the release said.
Prudential’s full-service retirement recordkeeping business has more than 4,300 workplace savings plans, which includes about 4 million plan participants with $314 billion in assets, the release said, noting that it also includes more than 1,800 employees.
“Empower and Prudential share a commitment to serving the financial needs of working Americans, their advisors and employers. This transaction will create an even stronger service organization at Empower, fueled by technology and the expertise of our deep talent pool,” Empower President and CEO Ed Murphy said in a statement. “We will continue to leverage our scale and resources to challenge the status quo and be uniquely positioned to serve the retirement and wealth management needs of millions of retirement savers in every phase of their financial journey.”
The acquisition will allow Empower to expand services to the workplace savings plans it now serves, which includes mega, large, mid-size and small corporate 401(k) plans; government plans ranging in scale from state-level plans to municipal agencies; not-for-profit 403(b) plans; and collectively bargained Taft-Hartley plans, the release said..
Empower has made several acquisitions in recent months, including Truist Bank’s heritage SunTrust 401(k) recordkeeping business; and last year it took over MassMutual retirement plan business; Personal Capital, a registered investment advisor and wealth manager, and Fifth Third Bank, National Association’s retirement plans.
The release said Empower will leverage its new capabilities from its acquisition of Personal Capital and offer “a highly personalized digital experience that can integrate the elements of any individual’s financial plan to help them better understand their current financial needs through financial advice and goal setting.”
“Today’s announcement is a significant milestone in Prudential’s transformation and the execution of our strategy to become a higher growth, less market sensitive, more nimble business,” Prudential Chairman and CEO Charles Lowrey said in a prepared statement. “In Empower, we have found a partner that, like Prudential, is passionate about expanding financial opportunity for more people, and that has the scale and expertise to ensure the long-term success of the full-service retirement business.”
Prudential will remain in the institutional and individual retirement market, continuing to serve retirees, annuitants and employers through its institutional investment products business, as well as through its individual annuities business and PGIM, the release said. Once the sale closes, Prudential’s retirement business will consist of pension risk transfer, international reinsurance, structured settlements, and institutional stable value wrap product lines.
The release said Empower will acquire Prudential’s retirement services businesses with both a share purchase and a reinsurance transaction. Great-West Life & Annuity Insurance Company will acquire the shares of Prudential Retirement Insurance and Annuity Company and business written by the Prudential Insurance Company of America will be reinsured by Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York (for New York business), the release said.
Headquartered in Greenwood Village, Colo., Empower administers $1 trillion in assets on behalf of 12 million retirement plan participants as of March 31.