MetLife disclosed in an 8-K filing with the Securities and Exchange Commission on Dec. 15 that it has not been paying benefits to a subset of the retirees it inherited from U.S. corporate pension plans.
The insurer, which is one of the 15 firms from which U.S. corporate pension plans purchase group annuity contracts to transfer their pension liabilities, said in the filing that of the approximately 600,000 members of their "group annuitant population," less than 5% of those participants have not received their benefits because they "have moved jobs, relocated, or otherwise can no longer be reached via the information provided for them," according to the filing. The exact number of participants, which "tend to be" those who received $150 or less in monthly benefits, has not been provided.
MetLife said in an emailed statement on Monday that its prior process for locating retirees who fell into those categories was insufficient. The company declined to comment on the total amount and how far back the missed payments go.
"While it is still difficult to track everyone down, we have not been as aggressive as we could have been," the company said in a statement. "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. 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."
"We are deeply disappointed that we fell short of our own high standards. 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," the statement concluded. The company said it is cooperating with regulators.
William F. Galvin, secretary of the commonwealth of Massachusetts and the chief of its securities division, said in a news release his office has begun an investigation into MetLife not paying benefits to that population.
"MetLife acquired the pension payment obligation from the retirees' former employer and now bears the responsibility of making sure that retirees receive their pension checks," Mr. Galvin said in the news release. "Retirees cannot afford to have glitches with their pension checks. I want to uncover why this occurred and how MetLife is going to rectify the problem for the retirees."
The news release said that Mr. Gavlin sent an inquiry letter on Monday seeking information on the plans whose liabilities were transferred, the number of accounts affected, and how and when the error was discovered.