William Galvin hits MetLife with $1 million fine for failing to keep track of pensioners

Massachusetts says insurance firm must pay retirees and beneficiaries who were 'presumed dead'

Dec 19, 2018 @ 12:59 pm

By Mark Schoeff Jr.

Massachusetts Secretary of the Commonwealth William Galvin on Wednesday hit MetLife Inc. with a $1 million fine and ordered the insurance firm to pay restitution to retirees and beneficiaries who it failed to locate after taking over their retirement plans.

Since January 1992, MetLife had bought pension plans from approximately 100 employers — such as grocery stores, hospitals and manufacturers — that employed workers in Massachusetts, according to the order. Many of the companies have since gone out of business. MetLife assumed responsibility for paying the pension obligations through a group annuity contract.

But MetLife was not rigorous in tracking down those who were supposed to receive payments from the annuity. The insurance firm sent one letter to the employees at the time of their normal retirement date and another when the annuity holder reached the age of 70½.

If MetLife didn't hear from the employee after the first letter, it made no follow-up. If it didn't hear back after the second letter, the firm assumed the person would never respond. He or she was "presumed dead," Mr. Galvin said.

As part of an investigation opened a year ago, MetLife provided a list of the missing pensioners to Mr. Galvin's office, which was able to locate a majority of them within two months. In accordance with Wednesday's order, MetLife will pay them or their beneficiaries their retirement funds with interest.

"My primary goal in this investigation has always been to get this money returned to the retirees to whom it is owed," Mr. Galvin said in a statement. "Many of the people affected are elderly and surviving on a fixed income. 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. They will now receive those payments, with interest."

MetLife neither admitted nor denied the charges in the order.

"Our focus since we self-identified and self-reported this issue has been to enhance our processes so that we deliver better service to our customers," MetLife spokeswoman Kim Friedman said in a statement. "This settlement is in line with that focus."

MetLife maintained liability reserves to pay the pension obligations it assumed. It released the reserves associated with the group annuity for thousands of participants who were presumed dead. Last June, Mr. Galvin charged MetLife with fraud because the improperly freed reserves were reported as assets and distorted MetLife's financial results.

(More: Galvin charges MetLife with inflating bottom line)

0
Comments

What do you think?

View comments

Most watched

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

INTV

Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

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