UK-based online pension provider PensionBee is to expand into the $22.5 trillion Defined Contribution pension market in the US.
The UK pension provider has entered into an exclusive, non-binding term sheet with a large US-based global financial institution which will provide expertise and "substantial marketing funding" to help the firm break into the US arena.
Romi Savova, CEO of PensionBee, comments: "In the year of our 10th anniversary, having demonstrated underlying profitability, we have entered discussions with a view to deploying our award-winning customer proposition, supported by our innovative technology platform and marketing approach, in the United States of America. This is a transformative step for PensionBee and for our stakeholders."
Under the proposed strategic relationship, PensionBee will deliver the US service through PensionBee Inc, to be established in Delaware as a wholly-owned subsidiary of PensionBee Group plc, with operational headquarters in New York.
PensionBee will manage the operations of the US business, including the hiring of a local team, making available its online retirement proposition and UK-based proprietary technology to US consumers in the US. PensionBee will enable US consumers to easily consolidate and roll over their 401(k) plans into a new Individual Retirement Account ('IRA').
Entry into a final binding agreement between the parties is subject to confirmatory due diligence, legal documentation and regulatory approvals, with launch expected in late 2024.
At the end of 2023, PensionBee had £4.4 billion of Assets Under Administration on behalf of approximately one quarter of a million invested customers. The firm achieved ongoing adjusted Ebitda profitability at the end of 2023 and expects to be profitable in the UK on an adjusted Ebitda basis for the full 2024 financial year.
PensionBee's Savova sees the potential for the US business to grow rapidly, becoming at least the size of its UK business over the next decade.
"By entering 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 look forward to a happy retirement," she says.