Consulting firm Mercer is selling its U.S. defined contribution administration book of business to Transamerica. The deal, expected to close by the end of this year, will see Transamerica become Mercer’s preferred DC recordkeeping provider.

Mercer’s U.S. DC retirement administration business has more than US$71 billion in plan assets, 148 clients and more than 917,000 participants.

“Mercer used to be a player in this business,” says Robert Lawton, president, Lawton Retirement Plan Consultants and regular contributor to EBN, adding the company is probably exiting the DC recordkeeping business “because margins are so much thinner." The move is "part of continuing consolidation in this business," he says.

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The deal will not affect Mercer’s defined benefit and health plan clients, the company said. “We also want to clearly state that we are committed to continuing to provide best of class service to our defined benefit and health clients through our own solutions,” said Ken Haderer, Mercer’s chief operating officer, in a statement.

This represents a big “step up” for Transamerica, says Lawton, adding it “shows they want to be a serious player in the recordkeeping business. There is a significant commitment to technology that needs to be made to stay competitive [and] Transamerica is willing to make that commitment."

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