US -USI Consulting Group has agreed to pay $470,000 to resolve allegations it accepted concealed compensation from insurers for pensions business, the Connecticut attorney general office has revealed.
It said USICG received hidden payments from The Hartford Insurance Company, The Principal Financial Services Group and Mutual of Omaha Insurance Company in connection with certain Single Premium Group Annuity (SPGA) insurance contracts since at least 1998.
In exchange for these hidden payments to USICG, the insurers received competitive information and 'last look' bidding opportunities not provided to carriers that declined to pay the secret compensation.
Connecticut attorney general Richard Blumenthal said: "More than the money, this settlement provides business reforms that prevent artificially inflated pension plan costs for private and public companies, non-profits and others.
"Hidden payments from insurers to brokers, disguised as 'expense reimbursements' and 'administrative costs,' were loaded into SPGA premiums for private and public pension plans nationwide. These payments served only one purpose - to skew the market in favor of select carriers who were willing to pay to play."
The office of the attorney general said due to the complexities associated with a pension plan's administrative requirements and legal obligations, many plan sponsors relied on an experienced annuity broker such as USICG to guide and navigate the plan to make the right annuity choice. The law requires the broker to act for the benefit of the plan sponsor.
The office added the settlement money would go directly to Connecticut's General Fund.
This week's edition of Professional Pensions is out now.
Laytons partner Jennie Kreser speaks of her concerns over pension outcomes.
Guy Opperman has indicated his support for a fresh pensions commission as the government seeks to understand how to progress pensions policy in a wide range of areas.
Auto-enrolment (AE) minimum contribution rates could rise to 12% by 2030, with a 50/50 split between employer and employee, the Pensions and Lifetime Savings Association (PLSA) says.