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December 19, 2019 at 05:23 PM
MetLife Inc. has agreed to pay a $10 million penalty to the U.S. Securities and Exchange Commission (SEC) to resolve concerns about problems the company discovered with some of its financial filings, SEC officials announced Wednesday.
The SEC concluded in an order that MetLife improperly freed up reserves for annuity benefits owed to pension plan participants who were somewhat hard to find.
MetLife also overstated the reserves and understated the income associated with the company’s variable annuity obligations in Japan, the SEC reported in the order.
(Related: DOL to Help MetLife and Brighthouse Shut Down Abandoned Plans)
The SEC is letting MetLife settle the matter without admitting or denying the SEC’s findings.
In addition to paying the $10 million, MetLife has agreed to stop violating the books and records rules and the internal accounting controls rules in federal securities laws.
MetLife said in a statement about the settlement that it told the SEC about the accounting problems.
“Our focus since we self-identified these issues has been to improve our processes to deliver better service to our customers,” MetLife said. “We successfully remediated both material weaknesses associated with this settlement as of December 2018.”
The Missing Pension Plan Participant Problem
MetLife began investigating how it was handling reserves for hard-to-find pension plan participants around 2012, according to the SEC order.
In 2014, the U.S. Department of Labor asked pension services providers to look at procedures for locating missing plan participants. Members of a MetLife team discovered that the companies were classifying participants who failed to respond to two mailings as “presumed dead.”
In 2016, the company came up with a different approach to looking for missing participants. It checked addresses using more databases, then sent each annuitant two letters through regular mail and one through certified mail. The company also tried to reach the annuitants who failed to respond by telephone, when a telephone number was available.
As of August 2017, about 81% of the previously unresponsive annuitants responded with efforts to collect benefits, and only 5.25% were confirmed to be dead, according to the SEC order.
