PensionBee Group plc (‘PensionBee’ or the ‘Company’), a leading online pension provider, today provides an update on its proposed expansion into the United States of America (‘US’), the world’s largest Defined Contribution pension market, representing approximately 80% of the global total and $22.5 trillion in assets.1
Having previously announced that it had entered into an exclusive, non-binding term sheet with a large, US-based global financial institution in order to expand into the US, the relevant parties have now entered into a final binding agreement, subject to regulatory approval.
In the US, under the proposed strategic relationship, PensionBee will enable consumers to easily consolidate and roll over their 401(k) plans into a new Individual Retirement Account (‘IRA’).2
PensionBee will deliver its US service through PensionBee Inc. which is a wholly-owned subsidiary of PensionBee Group plc, established in Delaware with operational headquarters in New York.
PensionBee Inc. will manage the operations of the US business, including the hiring of a local team, making available its award-winning online retirement proposition and UK-based proprietary technology to consumers in the US Defined Contribution pension market.
A financial contribution to PensionBee Inc. will be financed from the existing resources of PensionBee Group plc, with the US-based partner providing its expertise and substantial marketing funding.
Given the context of the enormous US market opportunity, PensionBee sees the potential for its US business to grow rapidly, becoming at least the size of its growing UK business over the next decade.
In the UK, PensionBee has approximately £4.9 billion of Assets Under Administration on behalf of 240,000 Invested Customers3. PensionBee will continue to grow its market share, pursuing a c.2% market share of the £1.2 trillion pensions market over the next 5-10 years and looking to onboard 1 million customers. Having achieved ongoing Adjusted EBITDA profitability at the end of 2023, the Company expects to be profitable in the UK on an Adjusted EBITDA basis for the full 2024 financial year.4
Romi Savova, CEO of PensionBee, commented:
“We are pleased to have taken this important next step towards deploying our award-winning customer proposition to customers across the US, the world’s largest Defined Contribution pension market. Where many consumers still struggle to prepare adequately for retirement amidst an array of confusing and difficult to use investment options, our straightforward approach to online retirement savings will help millions of consumers to enjoy a happy retirement.”
Footnotes
1. Investment Company Institute, “Release: Quarterly Retirement Market Data” as at 13 December 2023. Includes the sum of Defined Contribution Plans and Individual Retirement Accounts.
2. A 401k is an employer-sponsored Defined Contribution retirement plan into which employees can contribute and into which employers may also make matching contributions. An individual retirement account (‘IRA’) is a tax-advantaged retirement savings account into which an individual can contribute either pre- or post-tax money and which grows on either a tax-deferred or tax-free basis.
3. As at 31 March 2023. Assets under Administration means the total invested value of pension assets within PensionBee Invested Customers’ pensions. It measures the new inflows less the outflows and records a change in the market value of the assets. Invested Customers means those customers who have transferred pension assets or made contributions into one of PensionBee’s investment plans.
4. Adjusted EBITDA is the profit or loss for the period before taxation, finance costs, depreciation, share based compensation and transaction costs.
