PensionBee Plans US Expansion into $22.5 Trillion Defined Contribution Pension Market

UK-based online pension provider, PensionBee, is preparing to establish a foothold in the colossal $22.5 trillion Defined Contribution pension market in the United States. The company disclosed its strategy after entering into an exclusive, non-binding term sheet with a prominent US-based global financial institution. This partnership will bring substantial marketing funding and expertise to aid PensionBee’s entry into the US market.

A Transformative Step for PensionBee

PensionBee’s CEO, Romi Savova, described the move as a transformative step for the company and its stakeholders. She noted that the opportunity aligns with the company’s 10th-anniversary celebrations and its achievement of underlying profitability. The expansion will leverage PensionBee’s award-winning customer proposition, innovative technology platform, and marketing approach.

The Proposed Strategic Relationship

PensionBee plans to deliver the US service through PensionBee Inc, a wholly-owned subsidiary of PensionBee Group plc, set to be established in Delaware. The operational headquarters will be located in New York. The company will manage the operations of the US business—this includes hiring a local team and offering its online retirement proposition and UK-based proprietary technology to US consumers.

PensionBee plans to enable US consumers to consolidate and roll over their 401(k) plans into a new Individual Retirement Account (IRA). Finalizing the binding agreement between the parties, however, is contingent upon due diligence, legal documentation, and regulatory approvals. The launch is expected to occur in late 2024.

PensionBee’s Performance

At the close of 2023, PensionBee had £4.4 billion of Assets Under Administration, servicing approximately a quarter of a million invested customers. The firm reached ongoing adjusted Ebitda profitability at the end of 2023 and anticipates maintaining profitability in the UK on an adjusted Ebitda basis for the full 2024 financial year.

Looking Ahead

Savova predicts the US business to grow rapidly, potentially matching the size of its UK counterpart over the next decade. By entering the world’s largest Defined Contribution pension market, PensionBee aims to simplify online retirement savings for millions of consumers who often find investment options confusing and difficult to navigate. The company’s straightforward approach is designed to help consumers prepare adequately for retirement and look forward to a happy and secure future.