Empower Financial Acquires MassMutual Retirement Plan Business

Posted by dimisor on January 4th, 2023

Empower Financial has announced that it has acquired MassMutual's retirement plan business, which will allow the company to expand its retirement solutions to over half a million people. The acquisition, which was completed on June 30, 2018, marks the second major milestone in the company's strategic plans for the coming year. With a strong 92 percent participant retention rate, the newly combined retirement solution will be able to address a growing demand for financial services.

92 percent participant retention rate

Empower is a retirement plan management company that makes the process of saving for retirement easy to manage. It provides managed accounts, fund manager tables and taxable investment accounts. In addition, it offers a web based financial wellness experience that aims to make participants more aware of their money.blog here

The site also includes a 360 degree view of the participants' financial picture. They can browse taxable and tax deferred investment accounts, mortgages, liabilities, and other such things. To top it off, they can bookmark the Empower Retirement page.

Empower has been able to achieve impressive growth over the past few years. They have nearly doubled their assets under administration in just the last two years. This includes a robust suite of retirement services and a large 401k presence. Their clients include a smattering of large and small corporations as well as government and not for profit 403(b) plans.

Empower's signature product is the financial wellness oriented web based financial services experience. Featuring an ominous gizmo and a hefty dose of technological and product innovation, it is one of the most interesting 401k companies to watch.

Other highlights of the site include a financial oriented site-wide search feature, and a plethora of multimedia and educational content. On top of that, Empower is an advisor-centric retirement solution. Not only does it offer an easy-to-use and manage website, but it also maintains a solid client service team to support it.

There are many retirement plan providers out there, but only a few truly stand out as a true retirement solutions provider. Empower is the only company that can boast having the most retirement plans in the nation, while offering a full range of retirement products and services to match. Whether you are an employer looking for an outsourced 401k or an investor looking to save for retirement, Empower has a solution that is perfect for you.

With a stellar record of showcasing the most cutting edge retirement technology, a top notch staff and an impressive suite of financial and retirement products and services, Empower is the new go-to firm for your employee benefits and 401k needs.
Acquisition of MassMutual's retirement plan business

The merger of Empower and MassMutual retirement plan business is expected to close in the fourth quarter of 2020. The new firm will serve a broad spectrum of employers and government plans. Its product portfolio will include Taft-Hartley, collectively bargained and nonqualified plans.

The combined firm will serve more than seven thousand retirement plans. Empower is the second largest provider of retirement plans in the U.S., managing 4 billion in retirement assets. The firm combines technological excellence, financial wellness and comprehensive product offerings.

As part of the transaction, Empower will pay US.35 billion for MassMutual's retirement plan business. In addition, the company will contribute US billion of capital to support obligations associated with the plans.

The deal includes a reinsurance ceding commission of US.35 billion. Great-West Life & Annuity Insurance Company of New York will reinsure the business. This will put the company in a better financial position.

According to Empower, the combination of the two businesses will create a "trusted" firm with a scalable business model. The combined firm will focus on outcome-oriented, client-focused solutions.

The acquisition will boost Empower's retirement services recordkeeping assets to 4 billion. It will also add approximately 2.5 million participants to its existing 9.7 million. The firm's total employees will be around 2,000.

The firm plans to use its existing cash and long-term debt to fund the transaction. However, it expects to incur a one-time integration expense of 125 million.

Revenue synergies are expected to be US million in 2022. Empower expects to realize US0 million in cost savings over the course of the merger.

MassMutual's retirement services business will be migrated to Empower's proven recordkeeping platform. At the same time, the client service teams will be maintained.

According to the company, the merger will provide greater scale and expertise for the retirement plans of clients and employers. The combined firm will offer products and services that address the complex needs of clients.

With more than eight waves of plan integrations completed, the company is in the process of closing the integration of the MassMutual retirement plan business. Expected to complete in December 2020, this will create the next major milestone in the expansion of Empower's retirement services.
Integration of the acquired business

Empower Financial recently announced a definitive agreement to acquire the MassMutual retirement plan business. The transaction will bring together two companies renowned for their defined benefit plans. It will enable the firm to offer a comprehensive suite of retirement products and services. This includes a robust portfolio of defined contribution and defined benefit plans, as well as annuities from other providers.

MassMutual's business will be reinsured by Great-West Life & Annuity Insurance Company. The company will continue to offer MassMutual Funds and have the option to subadvise the funds.

The acquisition is expected to close in the first quarter of 2022. Empower expects to incur one-time integration costs of about 125 million. These costs include the acquisition of short-term debt and capital. In addition to the 125 million, Empower will pay a ceding commission of about .35 billion.

The new combined entity will be able to serve a broader range of retirement plans, including state and municipal government plans, not-for-profit 403(b) plans, and collectively bargained Taft-Hartley plans. Moreover, the firm will offer streamlined annuity offerings, and update its existing product offerings.

By acquiring the MassMutual retirement plan business, Empower will add more than 26,000 workplace savings plans to its recordkeeping assets. This will increase its participant base to 12.2 million.

With the acquisition, Empower will have 4 billion in retirement assets. In total, the transaction will generate approximately C.35 billion in cash and capital. A portion of the transaction will also require Empower to issue new long-term debt.

In total, the deal will generate revenue synergies of approximately US million in 2022. As a result of this, Empower's contributions to Great-West Lifeco's earnings are expected to grow to approximately 30% by 2023.

The newly combined firm will offer a digitally-enhanced experience for both participants and service teams. They will be able to access a 360-degree view of their financial picture, as well as lifetime income projections, taxable investment accounts, and bank accounts.

The MassMutual retirement plan business will be rebranded as Empower Retirement. MassMutual's current employees will be retained, along with its State ORP service team.
Upcoming milestones

Empower Financial is a full-service retirement plan management company. They offer a financial wellness-focused web experience and manage approximately 7 billion in retirement assets.

MassMutual is an insurance company with a long history and a prominent presence in the small-medium corporate market segment. The company has grown substantially over the last decade. It now serves more than 26,000 plans, including a significant presence in the small-medium corporate market.

MassMutual's website offers an interactive timeline that documents the company's 160-year history. Visitors can explore how the business has evolved to be an integral part of the community and economy. Users can also view portraits and artifacts from the company's history.

The MassMutual retirement plan business has grown from 1.4 million participants to over 2.5 million. It provides robust defined contribution and workplace savings plans.

The company has grown by more than twice the industry average. In 2000, MassMutual paid out more than billion in dividends. Since 1960, the company has paid more than billion in dividends.

Massachusetts Mutual Life Insurance Company, or MassMutual, is a life insurance company headquartered in Springfield, Massachusetts. It is a leading insurer in the United States.

MassMutual's retirement plan business has been a leader in the industry for decades, offering innovative solutions to help individuals and businesses achieve financial well-being. Their services include defined contribution, nonqualified and voluntary plans.

MassMutual's service teams will remain intact. This includes the State ORP service team. Participant Web pages will be updated to reflect Empower's service offering.

With the acquisition of the MassMutual business, Empower will add a significant set of capabilities and scale to its portfolio of retirement plans. In addition to providing an advisor-centric solution for retirement needs, the company will offer products to address more complex retirement planning issues.

The MassMutual transaction is expected to close in the fourth quarter of 2020. Empower will also pay a .35 billion reinsurance ceding commission. Combined with existing cash and new long-term debt, the transaction will bring the total value of the deal to US.35 billion.