MassMutual will move its corporate retirement plan from Empower to Fidelity Investments, MassMutual confirmed Friday.
“There’s consolidation; it’s happening. It’s very likely your recordkeeper will be acquired, and you can’t just accept the new one.”
The company said fiduciary due diligence led to its decision.
“As a matter of practice and to uphold our fiduciary responsibility, last year we issued a request for proposal for our retirement plans, which led us to make the decision to transition to a new recordkeeping service provider,” MassMutual spokesperson Laura Crisco said in a statement. “We are looking forward to a smooth transition of services from one industry leader to another to offer our participants the same retirement plans alongside new online and self-service features.”
Colorado-based Empower, the second-largest recordkeeper behind Fidelity, acquired MassMutual’s retirement plan business in January 2021.
The latest news raised interesting points about plan sponsor responsibilities as the retirement plan industry consolidates. Fiduciary due diligence must still be performed for a retirement plan post sale or merger and not just blindly accepted by an investment committee.
“You just can’t accept a new recordkeeper or TPA,” Fred Barstein, Founder and CEO of The Retirement Advisor University (TRAU), The Plan Sponsor University (TPSU), and 401kTV, explained. “That’s the message to plan sponsors. There’s consolidation; it’s happening. It’s very likely your recordkeeper will be acquired, and you can’t just accept the new one. You have to have a documented process.”
He emphasized that MassMutual found Fidelity to be a more appropriate fit for the needs of its employee base and does not reflect poorly on Empower. MassMutual’s retirement plan is most likely moving from its old system, an appropriate time to issue an RFP rather than automatically moving to a new system, Barstein added.
Empower said that as a matter of policy it would not comment on a client’s intent due to privacy and fiduciary concerns.
“However, what we can say is that our program to integrate the Mass Mutual business to the Empower platform is on track and exceeding our expectations,” a company spokesperson said. “The transition will include approximately 26,000 new clients and 2.5 million individuals who will move to the Empower platform. We look forward to the continued delivery of world-class financial services to these customers.”
At the time, Empower said its acquisition of MassMutual’s retirement plan business increased its participant base to more than 12 million and retirement services recordkeeping assets to approximately $884 billion.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
