MetLife, Brighthouse sued for $500 million over missing pensioners

Lawsuit claims insurers 'betrayed' thousands of pension plan participants and beneficiaries

Jun 20, 2018 @ 2:15 pm

By Greg Iacurci

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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Financial therapy fills the gap between money and emotions

Most clients have complicated relationships with their finances, according to Rick Kahler, founder of Kahler Financial Group, and financial advisers can help.

Latest news & opinion

Finra suspends former star LPL rep who borrowed client cash

Regulator says James E. 'Jeb' Bashaw borrowed $200,000 from a client in 2013 without telling LPL.

Higher tax bills following reform surprise clients

Lower withholding and the loss of state and local deductions throw many for loop.

Centerbridge said to be in talks to buy Advisor Group

Advisor Group's independent broker-dealer network in the U.S. has more than 7,000 advisers.

The drawback of Richard Thaler's 401(k)-Social Security idea? Social Security itself

Observers think Congress would need to address Social Security's funding levels and offer enhanced protections for the concept to work

Social Security funding outlook improves slightly

Retirement reserves extended one year; disability fund by 20 years

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print