Empower to Acquire Prudential's Retirement Business in $3.55 Billion Deal

In a major shift within the retirement services sector, Empower has announced a significant acquisition of Prudential Financial’s full-service retirement business. The landmark transaction, valued at $3.55 billion, will reshape the competitive landscape and create an industry powerhouse with unparalleled scale.

The Scale of the Deal

The acquisition will immediately position Empower as a dominant force in retirement administration. Once the deal closes in early 2022, Empower’s participant base will surge to 16.6 million individuals, while its retirement services recordkeeping assets will reach approximately $1.4 trillion. These figures underscore the transformative nature of this consolidation.

Prudential’s retirement business being acquired spans over 4,300 workplace savings plans, managing approximately $314 billion in participant assets. The deal also includes more than 1,800 specialized employees who currently handle comprehensive recordkeeping and administration services.

What’s Included in the Transaction

The Empower acquisition encompasses Prudential’s entire defined contribution and defined benefit platforms, non-qualified retirement accounts, rollover IRA operations, and investment vehicles including stable value and separate account products. This comprehensive package means Empower will now serve mega, large, mid-size and small corporate 401(k) plans, government plans ranging from state-level to municipal agencies, 403(b) entities for nonprofits, and Taft-Hartley collectively bargained plans.

Capital Structure and Financing

To support this integration, $2.1 billion in capital has been earmarked through a combination of the transferred business’s existing balance sheet and Empower’s own capital reserves. Prudential expects to receive approximately $2.8 billion in total proceeds from the transaction, with transaction-related costs and taxes estimated at roughly $400 million.

Strategic Rationale for Both Parties

For Empower, the acquisition amplifies its existing capabilities and technology infrastructure. Leveraging expertise from its 2020 acquisition of Personal Capital, Empower plans to integrate Prudential’s client base into a unified, state-of-the-art technology platform that offers personalized digital wealth management experiences.

For Prudential, this transaction aligns with its broader transformation strategy to become more agile and focused on higher-growth segments. The financial services leader intends to return $11 billion to shareholders through 2023, up from the previously announced $10.5 billion, while using proceeds to strengthen its balance sheet and reduce financial leverage.

What Remains for Prudential

Prudential will maintain a meaningful presence in the retirement market through its Institutional Investment Products division, which continues serving retirees and employers. Additionally, the company preserves its Individual Annuities business and PGIM, a top-10 global asset manager. Prudential’s remaining retirement operations will focus on Pension Risk Transfer, International Reinsurance, Structured Settlements, and its Institutional Stable Value wrap offerings.

Market Impact and Timeline

The transaction is expected to close in the first quarter of 2022, pending standard regulatory approvals. Upon completion, the combined entity will administer approximately 71,000 workplace savings plans, further consolidating the fragmented retirement recordkeeping market and potentially raising competitive barriers for smaller rivals.