PensionBee has announced ambitious plans to expand into America.
The online pensions provider has entered into an exclusive, non-binding term sheet with a large, US-based global financial institution.
The US has the world’s largest defined contribution pension market, representing approximately 80% of the global total and $22.5trn in assets.
Under the proposed strategic relationship, PensionBee will deliver the US service through PensionBee Inc.
This company will 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 consumers in the US defined contribution market.
PensionBee will enable US consumers to easily consolidate and roll over their 401(k) plans into a new Individual Retirement Account (‘IRA’).
The US-based partner will provide its expertise and substantial marketing funding.
PensionBee’s financial contribution will be financed from the existing resources of PensionBee Group plc.
Entry into a final binding agreement between the parties is subject to confirmatory due diligence, legal documentation and regulatory approvals.
The official launch is expected in late 2024.
PensionBee will continue to grow its market share in the £1trn UK defined contribution pension market, with the UK business financially separate to the US undertaking.
At the end of 2023, PensionBee had £4.4bn of assets under administration on behalf of approximately 250,000 invested customers
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 UK business over the next decade.
PensionBee chief executive Romi Savova said: “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.
“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.”
In April 2022, PensionBee said it had spent £12.9m on advertising and marketing in 2021, as it sought to capture market share and rapidly expand its customer base.
It said the majority of the £55m primary capital raised at the time of its IPO in April 2021 was earmarked for marketing expenditure.
In its half-year report in July 2021, PensionBee said it expected to be profitable by 2023.
In its interim report for 2023, the business reported a loss before tax of £9.2m, compared with a loss of £16.9m in H1 2022.
