Voya Financial is set to acquire OneAmerica Financial’s $60 billion retirement plan business, a move that both companies made public today.
The transaction is notable within an industry that has seen consolidation for years, with major players like Empower and Principal Financial making strategic acquisitions to enhance their market presence and scale. These firms have capitalized on opportunities to expand into segments where they previously had limited influence.
For Voya, the acquisition of OneAmerica’s retirement business will significantly bolster its full-service wealth solutions assets under administration, increasing by over 11% and bringing the total to approximately $580 billion. This deal will also expand Voya’s retirement plan portfolio to 60,000 plans, encompassing 7.9 million participants.
“OneAmerica’s extensive retirement capabilities, combined with Voya’s current product suite and digital solutions, provide us with a unique opportunity to broaden our reach across all market segments,” said Rob Grubka, CEO of Voya’s Workplace Solutions. “This deal allows us to deliver a more comprehensive range of health, wealth, and investment solutions across various workplace and institutional settings.”
The sale is expected to finalize by January 1, 2025.
“For over six decades, OneAmerica has remained committed to serving the retirement market, ensuring our customers can face the future with confidence,” said Scott Davison, CEO of OneAmerica. “Voya is the right partner to carry forward that commitment. This transaction presents a tremendous opportunity for both our customers and the OneAmerica employees who will transition to Voya. Meanwhile, we will concentrate on our core product lines, where we foresee considerable growth potential.”
Achieving scale in the defined-contribution plan business, which often operates with thin margins, is crucial for companies. Particularly for firms that struggle to retain a high percentage of assets through rollovers or have limited relationships with 401(k) participants across other business areas.
The sale of OneAmerica’s retirement business was anticipated by many in the industry. “It was always going to happen,” said Fred Barstein, founder of The Retirement Advisor University.
However, the fact that Voya is the buyer is somewhat unexpected. “Voya hasn’t been a major player in acquiring other plan businesses in recent years,” Barstein said. “They’ve been on the sidelines for a while when it comes to acquisitions in the 401(k) record-keeping space.”
In recent years, the pace of deal-making among plan providers has slowed as the industry matures. Companies have shifted their focus to larger, strategic acquisitions that substantially increase their scale. Barstein pointed to examples like Empower’s purchases of Prudential and MassMutual’s businesses, Principal’s acquisition of Wells Fargo’s retirement division, and The Standard’s 2022 purchase of Securian Financial’s record-keeping business. More recently, Ascensus announced its acquisition of Mutual of Omaha’s $3.9 billion 401(k) record-keeping business in March.
Voya, meanwhile, has been growing its multiple-employer plan business. Last month, the company’s assets in that segment—encompassing multiple employer plans, pooled employer plans, employer aggregation programs, and related services—surpassed $100 billion, marking a 15% year-over-year increase.
While the acquisition of OneAmerica’s retirement business is a positive addition to Voya’s portfolio, Barstein noted that it doesn’t necessarily fill any specific gaps in the company’s market presence. “As record keepers grow larger, the cost savings from adding more plans and participants diminish, even with substantial acquisitions,” Barstein said.
Currently, around 40 national defined-contribution record keepers remain in the market, and Barstein expects further consolidation to continue, albeit at a slower pace. “Once you’ve achieved scale, the focus shifts to profitability. More acquisitions will happen, but it’s about making the numbers work at this stage.”
