Potential in PEPs helps Smart secure $228 million in new funding

Big investors are betting on growth in the U.S. retirement plan market by funneling hundreds of millions of dollars to providers that specialize in small 401(k)s and pooled employer plans.

Today, pooled plan provider Smart announced its Series D funding round, which raised $228 million and was led by Chrysalis Investments. Other investors in the U.K.-based company include J.P. Morgan, Barclays, Natixis Investment Managers, the Link Group and Legal & General.

That followed small-plan provider Guideline’s recent announcement that it had raised Series E funding to the tune of $200 million.

“We believe that there is a major opportunity to transform the retirement market, providing wider access to retirement savings, delivering intuitive retirement income solutions and broadly democratizing retirement for all Americans,” Smart CEO Jodan Ledford said in the company’s announcement. “This investment allows us to bring on more talented retirement and technology professionals, expand the presence of our platform, the capabilities of our firm and continually deliver innovative solutions.”

The company provides a similar plan structure in the U.K., known as a master trust. Smart, which administers $2.4 billion among 70,000 employers, also has a presence in Australia and the Middle East, according to the firm.

The company is one of numerous players in the PEPs market in the U.S., which is in its early days. Another company targeting the market is Fidelity, which earlier this year launched its PEP. Principal Financial Group and Lockton Investment Advisors have also reportedly been signing employers up for the PEP those companies partner on.

It’s unclear how much business PEPs have attracted in the first seven months they’ve been in existence, but some plan providers are banking on more demand on the 403(b) side, which could become eligible for the plan structure if Congress passes legislation.

Others, such as Vestwell CEO Aaron Schumm, have also said they see much potential in the SECURE Act’s “group of plans” structure that would go into effect next year. The expansion of state-sponsored automatic IRA programs is also being credited with prompting more small businesses to consider offering their workers retirement plans for the first time.

The post Potential in PEPs helps Smart secure $228 million in new funding appeared first on InvestmentNews.

Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.

Andrew Vincent
Andrew is half-human, half-gamer. He's also a science fiction author writing for BleeBot.
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