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January 31, 2019 at 07:37 PM
The New York State Department of Financial Services is imposing $19.75 million in fines on Metropolitan Life Insurance Company, a unit of MetLife Inc., in connection with allegations of pension plan administration problems.
MetLife agreed to pay the fines, pay $189 million in restitution to affected pension plan participants in New York state and elsewhere, and develop proposals for ways it could do better in the future in a consent order.
(Related: MetLife Profit Beats Estimates as Firm Works to Fix Mishaps)
Michel Khalaf, the president of MetLife’s U.S. business, signed the consent order on behalf of Metropolitan Life. Khalaf is on track to become president of MetLife Inc. May 1.
A link to a copy of the consent order is available here.
MetLife, like many other big insurers, assumes responsibility for employers’ pension plans by selling the employers group annuities. In late 2017, the company was administering pension benefits for about 600,000 retirees.
MetLife reported in December 2017, in a notice filed with the U.S. Securities and Exchange Commission, that it had improved the way it tracked participants and discovered that it had lost track of up to 30,000 of the participants. The company said it believed the tracking problems reflected a material weakness in controls, and that it had reported that weakness in controls both to the New York department and to the SEC.
The company said it was adding $510 million in reserves to its group annuity operation, to restore reserves it had previously released, after concluding that the number of plan participants was lower than it actually was.
Maria Vullo, New York state’s outgoing financial services superintendent, acknowledged in a statement that MetLife told the department about the retiree tracking problems.
