Empower Retirement has entered into a definitive agreement with Massachusetts Mutual Life Insurance Company (MassMutual) to acquire its retirement plan business.

Empower will acquire the retirement plan business in a reinsurance deal for a ceding commission of $2.35bn.

Furthermore, the balance sheet of the transferred business would be supported by $1bn of capital when merged with the existing US business of Empower.

MassMutual’s retirement plan business is said to consist of 26,000 workplace savings plans. The business employs around 2,000 people who support services for financial professionals, plan sponsors and participants.

The transaction is expected to scale up Empower’s participant base to over 12.2 million and retirement services recordkeeping assets to nearly $834bn.

Empower Retirement president and CEO Edmund F. Murphy III said: “With today’s announcement, Empower is taking the next step toward addressing the complex and evolving needs of millions of workers and retirees through the combination of expertise, talent and business scale being created.

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“Together, Empower and MassMutual connect a broad spectrum of strength and experience with a shared focus on the customer.”

The unified firm will serve retirement plans sponsored by a range of employers. These are said to include mega, large, midsize and small corporate 401(k) plans and government plans ranging in scale from state-level plans to municipal agencies.

It will also offer plans by not-for-profits such as hospital and religious organisation in addition to collectively bargained Taft-Hartley plans.

MassMutual chairman, president and CEO Roger Crandall said: “In Empower, we are pleased to have found a strong, long-term home for MassMutual’s retirement plan business, and believe this transaction will greatly benefit our policy owners and customers as we invest in our future growth and accelerate progress on our strategy.”

In connection with the acquisition, Empower and MassMutual intend to enter into a strategic partnership to distribute digital insurance products offered by Haven Life Insurance Agency as well as MassMutual’s voluntary insurance and lifetime income offerings to customers of Empower Retirement and Personal Capital.

The transaction is expected to close in the fourth quarter of this year, subject to regulatory approvals.