WASHINGTON BUREAU — Rep. Edolphus Towns is asking the U.S. Government Accountability Office (GAO) to look at use of retained asset accounts (RAAs) at the federal employees’ group life plan.
Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee, wants the GAO to look at how the Office of Personnel Management (OPM) came to let MetLife Inc., New York (NYSE:MET), use the RAA as the standard vehicle for paying Federal Employees Group Life Insurance (FEGLI) death benefits.
An insurer uses an RAA to pay benefits through an arrangement that resembles a checking account rather than sending the beneficiary a check for the whole amount.
Critics say RAAs often pay lower interest rates than bank accounts and are not insured by the Federal Deposit Insurance Corp.
Supporters say RAAs pay rates comparable to the rates provided by other safe, highly liquid accounts, are backed by state insurance guaranty funds, and give grieving beneficiaries time to postpone making complicated financial decisions.
Towns says he believes MetLife earns about 4%