Insurance provider MetLife is under investigation by New York and Massachusetts regulators due to its inability to pay thousands of pensions because it cannot locate the beneficiaries.
MetLife reported Saturday that it is in the process of locating approximately 30,000 retirees owed less than an average $150 per month in annuity benefits. The regulators then began to crack down on the New York-based insurer Monday.
MetLife CEO John Hele said the affected retirees, which represent less than 5% of the company’s 600,000 annuity beneficiaries, “have moved jobs, relocated, or otherwise could not be located,” during a Friday conference call with financial analysts, USA Today reports.
“When we realized this was a significant issue, we launched an effort to do three things: figure out what happened, strengthen our processes so that we do a better job locating retirees, and promptly pay anyone we find–as we always do,” MetLife representatives told CIO in a statement regarding the matter. “We are implementing enhanced techniques within MetLife’s Retirement and Income Solutions business to better locate and promptly pay any group annuitant who may be entitled to benefits.”
In response, Massachusetts Secretary of State William Galvin and New York Department of Financial Services Superintendent Maria Vullo are also looking into the situation to secure the owed payments to the retirees.
While Galvin wrote to MetLife in hopes to uncover more information regarding the situation as well as obtain a list of the affected retirees and MetLife’s repayment plans, Vullo’s agency is conducting a separate review to make sure the benefits are paid.
“Retirees cannot afford to have glitches with their pension checks,” Galvin said in a statement.
MetLife agreed to fully cooperate with regulators, citing a need for a new way to find retirees with owed benefits.
“What used to be standard protocol for finding retirees who are owed benefits is no longer sufficient,” MetLife said. “While it is still difficult to track everyone down, we have not been as aggressive as we could have been.”
The company will provide an update on the situation in early 2018, when MetLife reports its fourth-quarter earnings. MetLife warned that the problem “may be material to our results of operations.”
“We are deeply disappointed that we fell short of our own high standards,” MetLife said. “Our customers deserve better. We are committed to making this right for our customers. We found the issue, we self-reported it, and we are committed to doing better.”
Tags: Maria Vullo, MetLife, Pension, William Gavin