MetLife Inc. and Brighthouse Financial Inc. have been sued for failing to pay at least $500 million in retirement benefits over the past 2½ decades to thousands of pension plan participants.
In December, MetLife disclosed that it had failed to pay pension benefits to tens of thousands of employees covered by its group annuity contracts, which employers purchase to offload pension liabilities to insurance companies, which become responsible for paying the pension benefits. The company said it hadn't paid benefits because it was no longer able to reach participants, because they had changed jobs or moved. That revelation sparked investigations by state securities regulators as well as the Securities and Exchange Commission.
The lawsuit seeks to hold the insurers accountable for having "betrayed thousands of annuitants and their beneficiaries" by keeping more than $500 million in retiree benefits.
"Our objective here is to get people paid their benefits, have MetLife pay some interest for delayed payments, have MetLife disgorge any profits it may have made from using the money, and to improve its practices, frankly," said Gregory Porter, a partner at the law firm Bailey & Glasser, which is representing the plaintiff, Edward Roycroft, in the proposed class-action lawsuit.
MetLife spokeswoman Kim Friedman said the company is reviewing the lawsuit and will defend itself "vigorously."
"We are aware of the filing and it is currently under review," said Brighthouse spokeswoman Meghan Lantier. "As a matter of policy, we do not comment on pending litigation." Brighthouse is MetLife's former U.S. retail insurance business, which it spun off last year.
Pension-risk transfer transactions have swelled in popularity over the last five years amid increasing longevity and soaring costs to maintain pension plans. The federal tax law signed last year gave employers an added incentive to execute a pension risk transfer transaction this year due to the new, lower corporate tax rate.
MetLife was among the top five sellers of group annuity contracts in 2017, according to Limra, an insurance industry group.
The lawsuit, Roycroft v. MetLife Inc. et al, was filed Monday in U.S. District Court for the Southern District of New York.