After a year-long investigation into MetLife for failing to make pension payments to retirees, Secretary of the Commonwealth William F. Galvin has announced that his office has entered into a consent order that requires MetLife to pay a fine of $1 million and provide payments, with interest, to hundreds of Massachusetts retirees and beneficiaries it had wrongly designated as “presumed dead.”
MetLife said it has set aside $510 million and expects to make payments to 13,500 people nationwide. Several law firms have filed a class action lawsuit against MetLife in the district court in New York, alleging the insurer failed to make timely pension payments to as many as 30,000 retirees nationwide.
“My primary goal in this investigation has always been to get this money returned to the retirees to whom it is owed,” Secretary Galvin said. “Many of the people affected are elderly and are 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.”
The consent order settles fraud charges Galvin’s Securities Division charged MetLife with, after the company misleadingly counted the unpaid pension benefits as assets in public financial statements.
MetLife bought the obligation to pay the employees’ pensions from their former employers and was required to keep funds in reserve for these retirees and to make payments when the former workers came of age.
“The problem with this system of transferring pension responsibilities is that nobody is policing it,” Galvin said. “I believe that new legislation is necessary to make sure that retirees do not keep falling through the cracks.”
Galvin first announced that he was opening an investigation into MetLife on December 18, 2017, after the company disclosed that it had failed to make payments to thousands of retired workers because of MetLife’s own inability to locate them.
MetLife provided the names of the missing pensioners to Galvin’s office as part of the investigation. Through its own searches, Galvin’s Securities Division was able to locate a majority of the Massachusetts retirees affected within just two months. Galvin’s office was also discovered that some of the retirees had passed away without receiving their pension payments, and that their beneficiaries are potentially entitled to payments from MetLife.
Approximately half of the seniors lost by MetLife were still living at the same address the company had on file for them for the entire time MetLife failed to make payments to them.
MetLife was provided with the results of the Securities Division’s searches in March 2018. Several plan participants reported to Galvin's office that MetLife had been slow to respond, lost their paperwork or had not provided back payments with interest, Galvin said.