MetLife Inc., New York, disclosed in an 8-K filing with the Securities and Exchange Commission on Tuesday that it has not paid about 13,500 participants in its group annuity population over the past 25 years due to insufficient administrative practices.
The company originally disclosed in a December filing that "less than 5%" of its 600,000 participants, which includes retirees inherited through the transfer of liabilities by U.S. corporate pension plans, had not received benefits. In the new filing, MetLife said about 25 years ago, "companies that are or have been MetLife Inc. subsidiaries established a practice of releasing the full insurance liability after two attempts at contacting these annuitants, based on the presumption that these annuitants would never respond and had not become entitled to benefits based on certain contractual provisions."
At that point, MetLife said the reserves set aside for those participants were released. Now, the company has added $510 million back to those annuity reserves.
MetLife said no more than 1,000 annuitants were affected in any given year, and the affected population was about 13,500 people over the past 25 years. Further information on tracking down the participants was not provided.
The insurer is one of 15 companies in the U.S. from which corporate pension plans purchase group annuities to transfer their pension liabilities. One of the more recent such transactions was a pair of purchases in 2017 by Sears Holding Corp., Hoffman Estates, Ill., transferring $515 million and $512 million, respectively, to MetLife. Howard Riefs, Sears Holding spokesman, declined comment.
MetLife officials were not immediately available to provide comment.