February 11, 2015 – On the eve of Christmas Eve, two big players in the retirement plan industry made an announcement that seemed to pass quietly amid the hustle of the holidays—John Hancock will acquire New York Life’s Retirement Plan Services (RPS) business.
The resulting combined RPS businesses will consist of approximately $135 billion in assets under administration, 55,000 retirement plans and 2.5 million plan participants. The firm says the combined business will create a top-15 provider of retirement plan services in the mid-case plan market.
According to Plansponsor’s latest Defined Contribution Survey, 93% of John Hancock’s RPS business is in the under $5 million market. Peter Gordon, senior vice president (SVP) and president of John Hancock RPS, tells Plansponsor that most of his company’s business is actually in the under $3 million micro-plan market. New York Life RPS has more business in the medium- and large-plan markets.
According to Gordon, the acquisition will mean different things for different segments. “We offer creative plan design for small businesses but do not offer total outsourcing,” he says. “We will continue to do what we do in the micro market; we have a third-party administrator [TPA] do plan administration.
However, with the acquisition of New York Life RPS, which has a strong nonqualified plans business, John Hancock will also promote total outsourcing, with which plan sponsors in the medium and large markets can bring all their plan types – 401(k), defined benefit (DB) and nonqualified – under one roof. “This gives us a more competitive edge,” Gordon says. “It is a capability we are very interested in, but we don’t plan to take it down to the micro market.”
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