MetLife Reaches Settlement With Massachusetts Over Failure to Pay Thousands of Workers' Pensions
December 19 2018 - 5:29AM
Dow Jones News
By Leslie Scism
MetLife Inc. will pay a $1 million fine to Massachusetts in its
first regulatory settlement after the insurer failed to pay 13,500
people their pension benefits.
The big New York insurer disclosed almost exactly one year ago
that it had failed to adequately search for beneficiaries of
private-sector pension plans for which it had taken on
responsibility. Instead, it designated the people as "permanently
unresponsive" after a couple of unanswered letters and booked as
profit the money that should have been paid out. Some retirees were
owed money from as far back as the 1990s, with amounts averaging
less than $150 a month.
Massachusetts Secretary of the Commonwealth William F. Galvin
said in an interview that the fine follows a probe covering
hundreds of retirees in the state.
"Many of the people affected are elderly and are surviving on a
fixed income," he said. "While the payments may have seemed small
or insignificant to MetLife, these checks could have made a big
difference for the people who never received them."
A MetLife spokeswoman on Tuesday said that the insurer
"self-identified and self-reported" the problem to regulators and
overhauled its search process for locating beneficiaries. It has
said it is paying interest to beneficiaries on their overdue
money.
MetLife said it is continuing to cooperate with an investigation
by the Securities and Exchange Commission, an examination by New
York's Department of Financial Services and some other
inquiries.
In addressing the matter, the insurer early this year said it
had bolstered its pension-payment reserves by $510 million pretax
to adjust for improper releases in earlier years. The 13,500 people
who hadn't received their benefits represented about 2% of the
600,000 people for whom MetLife had responsibility as of early
2018.
Approximately half of the Massachusetts residents that MetLife
wasn't paying were still living at addresses MetLife actually had
on file, Mr. Galvin said. Among recipients of the back payments
will be retirees who worked for grocery stores, hospitals and
manufacturers no longer in business, he said. Their average age is
72.
The state also found that some retirees died without receiving
their pension payments, and that their beneficiaries were likely
entitled to payments from MetLife.
The settlement resolves a complaint filed in June against the
insurer by Mr. Galvin's Securities Division, accusing MetLife of
fraud in connection with statements about the pensions in past
public financial filings. The complaint said MetLife didn't take
reasonable steps to reach plan participants. MetLife has signed a
consent order, which details steps it is taking to locate
people.
MetLife's disclosure of the matter in December 2017 highlighted
a widespread challenge that faces insurers in the booming
pension-risk-transfer business, and many employer-sponsored pension
plans that remain in place. In a sign of concern about monthly
benefits not always being paid to retirees, the U.S. Department of
Labor in recent years has been stepping up pressure on
private-sector pension plans to do a better job finding missing
participants.
Mr. Galvin said he believes that federal legislation may be
required to address the matter.
"There is a real gap," he said in the interview. "Cheating is
cheating. We have to stop it."
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
December 19, 2018 05:14 ET (10:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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