MetLife Hires Firms to Locate Workers Owed Pensions -- Update
December 21 2017 - 12:45PM
Dow Jones News
By Leslie Scism and Heather Gillers
MetLife Inc. hired a law firm to investigate how its retirement
business failed to aggressively search for possibly tens of
thousands of people owed pension benefits and is planning to hire a
specialty firm to help locate the missing people, company
executives said in interviews Wednesday.
The company is working to meet an internal goal to determine by
Feb. 1 how much money it owes people, the executives said. It is
using databases that have become more robust in recent years to
find where people live and is trying to reach them with certified
letters. It also will soon employ the outside vendor, which has a
specialty in identifying addresses, they said.
The move coincides with a nationwide push by the U.S. Department
of Labor to restore pension benefits to beneficiaries whose former
employers have lost track of them.
Metlife's executive comments come a few days after the New York
insurer disclosed it failed to pay thousands of pensions. Those
retirees generally have average benefits of less than $150 a month.
At the time, the firm said it believes the group represents less
than 5% of about 600,000 people who receive certain benefits from
the firm. The company also said the addressing the issue "may be
material to our results of operations."
In the interview Wednesday, executives for the big insurer said
the firm wants to be able to put a size on the cost of fixing the
problem when it details its fourth-quarter earnings on Feb. 1. The
cost would include paying pensions back to the date the people were
first eligible to draw their monthly income, the executives
said.
"We are deeply disappointed we fell short of our own high
standards on this issue," MetLife Chief Executive Steven Kandarian
said in the company's first interview since its disclosure last
week.
MetLife's disclosure and ramped-up effort stems from a pilot
project that it launched in August 2016 partly because the U.S.
Department of Labor was stepping up pressure on private-sector
pension plans to do a better job finding so-called missing
participants, the executives said.
MetLife's pension business isn't regulated by the Labor
Department, but its managers were aware of some of the additional
steps that these private-sector plans were taking. The DOL effort
has been publicized in trade publications and has been the subject
of discussion at organizations focused on employer-sponsored
benefits programs.
The federal effort began in 2013 at the DOL's regional office in
Philadelphia, where benefits advisers were fielding questions from
pensioners wondering why they weren't receiving pension benefits
mentioned on their Social Security notices, according to an
official familiar with the program. Those notices list pensions
whose sponsors have reported to the federal government that they
have made pension contributions on pensioners' behalf.
By 2015, the office had opened an investigation, sending out
inquiries to the 50 largest plans in the Philadelphia region, this
official said. The plans reported that about 86,000 beneficiaries
-- about 2.6% of all participants -- weren't receiving benefits
owed to them. So far, the Philadelphia office has been able to
reunite about 4,000 people with about $270 million in value for
past and future benefits, this official said. The nationwide
campaign was launched this year.
MetLife is one of a number of large and highly rated life
insurers that contract to take responsibility for some or all of
the payments due participants in private-sector plans. These deals
are called "pension risk transfer." Many employers with
old-fashioned pension plans, under which they pay monthly benefits
to retired workers, are eager to reduce their exposure to
investment and interest risk in running pensions by striking
risk-transfer agreements with insurers.
MetLife has been in the pension business for decades. In years
past, it had used regular mail to contact future pension
recipients, beginning about six months before their eligibility age
for drawing the monthly checks, said Michel Khalaf, a senior
MetLife executive whose responsibilities include the pension
business. MetLife used addresses it had on file for the people. If
the letters were returned as undeliverable, it sought some
additional addresses from data firms, and sent more letters.
The pilot project involved "a few hundred" participants, Mr.
Khalaf said. MetLife employees tapped into more data sources than
previously used, and the company was "more aggressive in trying to
find the addresses," Mr. Khalaf said.
The company isn't disclosing details of how many of the people
who previously hadn't been located were reached through the
project. It was escalated to the attention of Mr. Khalaf in October
of this year, and he brought it to Mr. Kandarian.
"The outcome pointed us in the direction that we needed to do
more and to evolve our processes" because they "were not as
aggressive or robust as they needed to be," Mr. Khalaf said. "The
fact that the results came back telling us we can find more of
them, that is something we felt compelled to do something
about."
Since the pilot project, MetLife has continued to beef up search
efforts, including using certified mail to make it stand out as
particularly important, the company said.
The law firm is Robinson McDonald & Canna LLP, MetLife
said.
"We are committed to making this right" for customers, Mr.
Kandarian said.
Write to Leslie Scism at leslie.scism@wsj.com and Heather
Gillers at heather.gillers@wsj.com
(END) Dow Jones Newswires
December 21, 2017 12:30 ET (17:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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