Correct.
CPI-U adjustment too small on AIG SPIA
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
Nice try, but no. That doesn't explain it (for me at least)
I think this may the cause.Because of this guaranteed minimum payment level, any negative movements in CPI which are not applied to the Annuity Benefit will be used to offset future CPI increases.
I see negative September-to-September inflation changes in 2009, 2015. If they're carrying over the decrease, you may see effects for a couple of years or more.
1. What they're saying is that the benefit would never go below the initial payment (not the previous year's payment).
2. My payment did indeed go down, from from 2008 to 2009, and from 2014 to 2015, exactly matching the Sept-to-Sept decrease in CPI-U.
3. The downward percentage for those two years totals 1.33%, nowhere near the shortfall many of us are seeing this year.
Re: CPI-U adjustment too small on AIG SPIA
I think I will avoid AIG for any future annuity purchases, should I desire them.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
This was not the case for me. My increase in 2020 (over 2019) was the correct 1.37%.
Re: CPI-U adjustment too small on AIG SPIA
I decided to write an old fashioned letter and mail it via old fashioned USPS. We had a change of address last summer, and I had a quick response and action when writing to the address here (posted for others to use). This is where I'll send my letter. I'll give them 45 days (ish) and escalate (not sure how, yet, maybe the Insurance Commissioner) if I don't get a result.
American General Life Insurance Company
Annuity Service Center
PO Box 2708
Amarillo, TX 79105-2708
American General Life Insurance Company
Annuity Service Center
PO Box 2708
Amarillo, TX 79105-2708
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
First, a big mea culpa. At this point I'm almost sure that I messed up when I suggested that in my annuity I was seeing 15-month, rather than a 3-month delay in making the CPI adjustments. Sorry to have posted misinformation and to have alarmed anyone. I now think the adjustment is calculated September-to-September, like Social Security but CPI-U rather than CPI-W, and takes effect in the monthly payments three months later.
Just to add to the list of "so-far-unverified contact possibilities" I notice that the annual letters I get stating the "fair market value" of the annuity come from "Annuity Service Center, P.O. Box 1277, Wilmington, DE 19899-1277 and invite me to call "our Client Care Center" at 1-877-299-1724.
Added: I just notice that this is the same number printed at the top of the 1099-R forms.
Yesterday I spent roughly fifty minutes on hold--first at 800-225-5244 where I eventually spoke to someone who could find no record of my annuities and transferred me to 800-448-2542, which is "retirement services." Based on the website it seemed utterly irrelevant, looked like it's for 401(k) participants, and after maybe 20-25 minutes I gave up and just hung up.
I mailed a paper letter to the CEO. Next week when I'm feeling mellow I'll try at least one phone call.
I noticed that the original paperwork says
I've received no annuity notices or paperwork with the Vanguard name on them since 2007. All of it has been from AIG, from a surprisingly varied assortment of address and names ("AIG Life Insurance Company" decided it was better marketing to revert to their pre-AIG name of "American General").
Just to add to the list of "so-far-unverified contact possibilities" I notice that the annual letters I get stating the "fair market value" of the annuity come from "Annuity Service Center, P.O. Box 1277, Wilmington, DE 19899-1277 and invite me to call "our Client Care Center" at 1-877-299-1724.
Added: I just notice that this is the same number printed at the top of the 1099-R forms.
Yesterday I spent roughly fifty minutes on hold--first at 800-225-5244 where I eventually spoke to someone who could find no record of my annuities and transferred me to 800-448-2542, which is "retirement services." Based on the website it seemed utterly irrelevant, looked like it's for 401(k) participants, and after maybe 20-25 minutes I gave up and just hung up.
I mailed a paper letter to the CEO. Next week when I'm feeling mellow I'll try at least one phone call.
I noticed that the original paperwork says
and next phone call I'll make a point of mentioning "RGA-####." Although I fear that will just get me into an AIG<->Vanguard runaround.GROUP POLICY HOLDER: The Vanguard Group, Inc.
GROUP POLICY NUMBER: RGA-####
CERTIFICATE NUMBER: VG########
I've received no annuity notices or paperwork with the Vanguard name on them since 2007. All of it has been from AIG, from a surprisingly varied assortment of address and names ("AIG Life Insurance Company" decided it was better marketing to revert to their pre-AIG name of "American General").
Last edited by nisiprius on Sat Jan 08, 2022 1:56 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
I've heard that writing an actual letter tends to get companies' attention, because it's so rare.
Would you mind sharing the text of your letter, so the rest of us can more easily do the same ?
Re: CPI-U adjustment too small on AIG SPIA
Sure...I kept it very simple:RustyShackleford wrote: ↑Sat Jan 08, 2022 12:50 pmI've heard that writing an actual letter tends to get companies' attention, because it's so rare.
Would you mind sharing the text of your letter, so the rest of us can more easily do the same ?
January 7, 2022
American General Life Insurance Company
Annuity Service Center
P.O. Box 2708
Amarillo, TX 79105-2708
Re: Annuity SPIAXXXXXX
Dear AIG Annuity Representative,
The 2022 inflation adjustment (increase in my monthly annuity payment received) for the above referenced annuity was much lower than the CPI stated rate of inflation. I believe there is an error…it appears that the percentage increase was the same as for the prior year. I suspect someone forgot to put in the new calculation. Please correct and/or advise as soon as possible.
Sincerely,
Mother of Leesbro63
Re: CPI-U adjustment too small on AIG SPIA
NISIPRIUS:
<<Yesterday I spent roughly fifty minutes on hold--first at 800-225-5244 where I eventually spoke to someone who could find no record of my annuities>>
The correct number IS: 877 299-1724 ("Life Insurance" department). See my earlier posting.
FWIW, I had the same experience as you did with the "annuity center": I was told they had no record. But when I called the life insurance number, they had no trouble finding it and have submitted a request to have things fixed (don't hold your breath). In any case, I do think that a letter to the office of the CEO is a good idea, in addition to calling.
<<Yesterday I spent roughly fifty minutes on hold--first at 800-225-5244 where I eventually spoke to someone who could find no record of my annuities>>
The correct number IS: 877 299-1724 ("Life Insurance" department). See my earlier posting.
FWIW, I had the same experience as you did with the "annuity center": I was told they had no record. But when I called the life insurance number, they had no trouble finding it and have submitted a request to have things fixed (don't hold your breath). In any case, I do think that a letter to the office of the CEO is a good idea, in addition to calling.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
Answered the phone in perhaps ten minutes, had my records, seemed to understand what I was saying, said they would follow up.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
Let us know if/when they do follow up.
It will be interesting to see how long it takes for them to identify this obvious error in procedures and/or calculations.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
A blast from the past. This has happened before, but the last time it was in my favor. Anyone else remember this?
In 2014 I got a letter saying this, in part:
In 2014 I got a letter saying this, in part:
Stinky wrote:April 14, 2014
...As a result of a recent audit of our files, we discovered that the annual inflation adjustment for 2014 was calculated incorrectly which resulted in an overpayment to you.
Effective January 1, 2014, the Consumer Price Index U ("CPI"*) rate that should have been applied to payments in 2014 was 1.18%. However, the rate that your payment increased by was 1.99% which resulted in an overpayment to you. We will not be requesting reimbursement of the overpayment and future payments will reflect the correct amount. Your corrected payment amount, beginning 5/1/2014, will be [dollar amount]
If we can be of any further assistance in this matter, please contact our Customer Service Center by telephone, Monday through Friday, 8:00 a.m. to 5:00 p.m. Eastern Time, at 1-877-299-1724 or by email at ImmediateAnnuity@AmericanGeneral.com
Apparently three or four months, last time!
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
I'd appreciate confirmation from cool heads. Is this correct?
As nearly as I can make out, my annuity increased payouts the same amount, about 1.7%, three years in a row:
a) At the start of 2020,
b) At the start of 2021, and
c) At the start of 2022 (monthly deposit dated 12/31/2021).
Based on CPI changes from September to September,
a) The 1.7% increase for 2020 was correct,
b) The 1.7% increase for 2021 was too much and should have been 1.4%,
c) The 1.7% increase for 2022 (October 2021 for Rusty Shackleford) was too little and should have been 5.4%.
So an error was made twice, two years in a row. Too much for the year 2021, not enough for the year 2022.
As nearly as I can make out, my annuity increased payouts the same amount, about 1.7%, three years in a row:
a) At the start of 2020,
b) At the start of 2021, and
c) At the start of 2022 (monthly deposit dated 12/31/2021).
Based on CPI changes from September to September,
a) The 1.7% increase for 2020 was correct,
b) The 1.7% increase for 2021 was too much and should have been 1.4%,
c) The 1.7% increase for 2022 (October 2021 for Rusty Shackleford) was too little and should have been 5.4%.
So an error was made twice, two years in a row. Too much for the year 2021, not enough for the year 2022.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- neurosphere
- Posts: 5205
- Joined: Sun Jan 17, 2010 12:55 pm
Re: CPI-U adjustment too small on AIG SPIA
Yikes, yet another thing to add the list of things I'm anxious about now, for issues which could affect me 20 years from now.
But I good lesson for when I (or someone I know) purchases a product with an inflation component: Get an explicit inflation calculation method in advance and double check ever year.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
Re: CPI-U adjustment too small on AIG SPIA
nisiprius wrote: ↑Wed Jan 12, 2022 9:39 am I'd appreciate confirmation from cool heads. Is this correct?
As nearly as I can make out, my annuity increased payouts the same amount, about 1.7%, three years in a row:
a) At the start of 2020,
b) At the start of 2021, and
c) At the start of 2022 (monthly deposit dated 12/31/2021).
Based on CPI changes from September to September,
a) The 1.7% increase for 2020 was correct,
b) The 1.7% increase for 2021 was too much and should have been 1.4%,
c) The 1.7% increase for 2022 (October 2021 for Rusty Shackleford) was too little and should have been 5.4%.
So an error was made twice, two years in a row. Too much for the year 2021, not enough for the year 2022.
2018 $xxxx.xx (From Form 1099-R)
2019 $xxxx.xx + 2.28% of the 2018 number (From Form 1099-R)
2020 $xxxx.xx + 1.71% of the 2019 number (From Form 1099-R)
2021 $xxxx.xx + 1.71% of the 2020 number (12 payments totaled this)
2022 $xxxx.xx + 1.71% of the 2021 number (12 times the new January payment received at the end of Dec 2021 for Jan 2022)
So, yes, our numbers appear to agree with your in that there was exactly a 1.71% increase three years in a row.
That being said, it's odd that an error would go on that long without someone catching it. Which implies that there is more to this story that we haven't teased out yet.
Re: CPI-U adjustment too small on AIG SPIA
I expect that there’s an error somewhere deep in the bowels of AIG.Leesbro63 wrote: ↑Wed Jan 12, 2022 10:16 amnisiprius wrote: ↑Wed Jan 12, 2022 9:39 am I'd appreciate confirmation from cool heads. Is this correct?
As nearly as I can make out, my annuity increased payouts the same amount, about 1.7%, three years in a row:
a) At the start of 2020,
b) At the start of 2021, and
c) At the start of 2022 (monthly deposit dated 12/31/2021).
Based on CPI changes from September to September,
a) The 1.7% increase for 2020 was correct,
b) The 1.7% increase for 2021 was too much and should have been 1.4%,
c) The 1.7% increase for 2022 (October 2021 for Rusty Shackleford) was too little and should have been 5.4%.
So an error was made twice, two years in a row. Too much for the year 2021, not enough for the year 2022.
2018 $xxxx.xx (From Form 1099-R)
2019 $xxxx.xx + 2.28% of the 2018 number (From Form 1099-R)
2020 $xxxx.xx + 1.71% of the 2019 number (From Form 1099-R)
2021 $xxxx.xx + 1.71% of the 2020 number (12 payments totaled this)
2022 $xxxx.xx + 1.71% of the 2021 number (12 times the new January payment received at the end of Dec 2021 for Jan 2022)
So, yes, our numbers appear to agree with your in that there was exactly a 1.71% increase three years in a row.
That being said, it's odd that an error would go on that long without someone catching it. Which implies that there is more to this story that we haven't teased out yet.
Some functionary named Stevie or Susie inadvertently made the one year increase repeat year after year. They pasted the increase percentage for one year to apply for all future years. It’s probably in some old computer spreadsheet or system that isn’t fully understood by current IT staff.
The challenge for Bogleheads is to jostle AIG enough so somebody is actually motivated to track down this error and fix it.
I’ve seen this kind of thing happen in life insurance companies. No malice - just lack of knowledge of the systems (and occasional incompetence).
My advice is to do what you’re doing now. Keep pushing all the levers. Eventually it will get fixed.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: CPI-U adjustment too small on AIG SPIA
And to support that, just above: probably the prior year increases were above inflation, so no annuity beneficiary bothered to look closely. It’s the large 2021 inflation number that finally caught someone’s attention, which in turn wakes others up via the internet. But before 2021 inflation wasn’t on anyone’s radar.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
Wow, this could end up being a charlie-foxtrot for the ages.
However, as I've said before, I've checked my numbers every year since I got the thing in 2007, and my calculated payments have differed from the payment I actually received by little enough to not bother with (a few cents out of roughly $1000) - until now.
The only things that might be different about mine are that I signed up for quarterly payments, and I got mine thru Vanguard (although I believe at least some of the other people on this thread did too).
Re: CPI-U adjustment too small on AIG SPIA
<<I'd appreciate confirmation from cool heads. Is this correct? >>
Yes, your results are exactly the same as mine (1.7% increase for 2020, 2021, 2022). FYI, my annuity was purchased thru Vangard late 2009, with monthly benefits beginning Jan 2010.
And FWIW I strongly agree with Stinky that persistence--continuing to bug AIG --is the key to success. While being respectful and calm in telephone calls and letters is critical, keep in mind that multibillion dollar companies don't get hurt feelings. It's OK to hassle them.
Yes, your results are exactly the same as mine (1.7% increase for 2020, 2021, 2022). FYI, my annuity was purchased thru Vangard late 2009, with monthly benefits beginning Jan 2010.
And FWIW I strongly agree with Stinky that persistence--continuing to bug AIG --is the key to success. While being respectful and calm in telephone calls and letters is critical, keep in mind that multibillion dollar companies don't get hurt feelings. It's OK to hassle them.
Re: CPI-U adjustment too small on AIG SPIA
< .. bowels of AIG... "
An apt metaphor
Now for a purgative.
An apt metaphor
Now for a purgative.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
Yes, it's actually 1.71% to two places.
A minor problem for me is that until I get my 1099-R, the only data I have are the actual deposits, with tax being withheld, and I need to calculate the pre-tax amounts. Fortunately they agree in a couple of years of overlap. My actual results with two-digit precision, with 2009 through 2020 being based on 1099's and 2021 and 2022 calculated from monthly deposits, have been:
Y = year
AIG = increase, year Y over year Y-1, as reported by the 1099-R for year Y.
CPI = increase, September Y-1 over September Y-2
Y, AIG, CPI
2009 -1.29% -1.29%
2010 1.14% 1.14%
2011 3.87% 3.87%
2012 1.99% 1.99%
2013 1.18% 1.19%
2014 1.66% 1.66%
2015 -0.04% -0.04%
2016 1.46% 1.46%
2017 2.23% 2.23%
2018 2.28% 2.28%
2019 1.71% 1.71%
2020 1.71% 1.37%
2021 1.71% 5.39%
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
Oh, forgot to mention. Called 877 299-1724 and after a reasonable wait on hold--didn't time it--a person answered, found my annuities with no trouble, seemed to understand the issue, and... darn it, forgot to write down what she said... left me with the impression she would send it to the right place for it to be dealt with.
As noted I also mailed a paper letter to
Peter Zaffino, Chairman and CEO
American International Group, Inc.
175 Water Street
New York, NY 10038
I'm reasonably confident a) that the problem has been brought to their attention in a way that will register if they aren't aware of it already, and b) that my two annuities, by contract number, are in the list of ones that need to be adjusted if they aren't already.
As noted I also mailed a paper letter to
Peter Zaffino, Chairman and CEO
American International Group, Inc.
175 Water Street
New York, NY 10038
I'm reasonably confident a) that the problem has been brought to their attention in a way that will register if they aren't aware of it already, and b) that my two annuities, by contract number, are in the list of ones that need to be adjusted if they aren't already.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
I think that the various contacts by Forum members will bring a positive resolution over the next few weeks. But if it doesn’t……
Nisiprius mentioned upthread that there had been a previous adjustment to his payments as a result of an “audit”. This opens up another possibility.
In my previous company, most all of the payment and financial functions were subject to review by Internal Audit on a rotating schedule, roughly every five years or so. It’s likely that the payment adjustment for nisiprius was the result of one of those audits.
If other avenues fail, folks could try to contact the Chair of the Board-level Audit Committee for AIG. That’s the Committee, headed by an outside Director, who is ultimately responsible for all audit functions of the company, including Internal Audit.
The “gnomes” in the company who actually do the internal audit work are a few steps below the Audit Chair. But I think that there’s a good chance that a complaint to the Audit Chair would get cascaded down to the gnomes for review and action.
As I said, likely not necessary. But another possible route of action.
Nisiprius mentioned upthread that there had been a previous adjustment to his payments as a result of an “audit”. This opens up another possibility.
In my previous company, most all of the payment and financial functions were subject to review by Internal Audit on a rotating schedule, roughly every five years or so. It’s likely that the payment adjustment for nisiprius was the result of one of those audits.
If other avenues fail, folks could try to contact the Chair of the Board-level Audit Committee for AIG. That’s the Committee, headed by an outside Director, who is ultimately responsible for all audit functions of the company, including Internal Audit.
The “gnomes” in the company who actually do the internal audit work are a few steps below the Audit Chair. But I think that there’s a good chance that a complaint to the Audit Chair would get cascaded down to the gnomes for review and action.
As I said, likely not necessary. But another possible route of action.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
I'm guessing that the CPI adjustment is a manual chore and whomever had been doing it retired or otherwise stopped and it just got overlooked. I believe AIG stopped issuing inflation-adjusted SPIAs a couple of years ago, so maybe the whole "inflation-adjusted annuity team" moved on.
It's rather disturbing that last year's error, a 1.71% raise that should only have been 1.39%, did not get caught by AIG.
I dismiss any idea of shenanigans on AIG's part because that error was in policyholders' favor. And that's all the more reason for thinking AIG was really careless.
Anyway, now they know.
The 2014 mistake was an overpayment, so quite possibly someone said "if we just eat this, then our customers will all be happy, and we don't need to do a bunch of programming and database tinkering and special computer runs." Similarly, 2021 was also an overpayment so they can, if they wish, let it go, and keep the IT department out of it.
But the 2022 mistake is an underpayment. It's going to take a bit of work for them to send out adjusted amounts on subsequent payments. I figure that even with the best will in the world, it will take them a while.
I hope they will at least go for good PR and good customer communications and send out some letter promptly saying "Oops, we goofed, don't worry, we'll take care of it, we're working on it and will let you know..."
I wonder what the total number of such policies issued was? Based on the string of zeros within my policy numbers, probably a few thousand at most.
It's rather disturbing that last year's error, a 1.71% raise that should only have been 1.39%, did not get caught by AIG.
I dismiss any idea of shenanigans on AIG's part because that error was in policyholders' favor. And that's all the more reason for thinking AIG was really careless.
Anyway, now they know.
The 2014 mistake was an overpayment, so quite possibly someone said "if we just eat this, then our customers will all be happy, and we don't need to do a bunch of programming and database tinkering and special computer runs." Similarly, 2021 was also an overpayment so they can, if they wish, let it go, and keep the IT department out of it.
But the 2022 mistake is an underpayment. It's going to take a bit of work for them to send out adjusted amounts on subsequent payments. I figure that even with the best will in the world, it will take them a while.
I hope they will at least go for good PR and good customer communications and send out some letter promptly saying "Oops, we goofed, don't worry, we'll take care of it, we're working on it and will let you know..."
I wonder what the total number of such policies issued was? Based on the string of zeros within my policy numbers, probably a few thousand at most.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
To Nisiprius, just above: What’s different this time is the need for urgency. My mother’s fairly small annuity payment underpayment won’t cause her any financial pain. But that may not be the case for everyone. AIG has an obligation to pay the correct amount and to do it on time. If they error in favor of annuitants, it’s their problem (although it does make annuitants question their ability to make prudent decisions to remain solvent). But an underpayment is a serious breach of contract that hurts the little guy. My guess is that they will fix this once it gets the attention of someone with authority.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
You're right.Leesbro63 wrote: ↑Thu Jan 13, 2022 3:19 pm To Nisiprius, just above: What’s different this time is the need for urgency. My mother’s fairly small annuity payment underpayment won’t cause her any financial pain. But that may not be the case for everyone. AIG has an obligation to pay the correct amount and to do it on time. If they error in favor of annuitants, it’s their problem (although it does make annuitants question their ability to make prudent decisions to remain solvent). But an underpayment is a serious breach of contract that hurts the little guy. My guess is that they will fix this once it gets the attention of someone with authority.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
I got through on the telephone right away by calling Annuity Administration at 877-299-1724. I was told that my issue would be sent to the "processing team", who would review and send me a letter of explanation, which I could expect to receive in three to five business days plus mailing time. We'll see.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
Hurray ! Just called back and they said a correction has been made. I'll be sent a make-up check for the January payment and the correct payment made going forward. Computing the expected future payments from the sum of the actual January payment I received plus the make-up they promised, I get an amount that's actually slightly higher than what I compute from the Sept-to-Sept CPI-U numbers.
Re: CPI-U adjustment too small on AIG SPIA
Congratulations!RustyShackleford wrote: ↑Tue Jan 18, 2022 1:06 pm Hurray ! Just called back and they said a correction has been made. I'll be sent a make-up check for the January payment and the correct payment made going forward. Computing the expected future payments from the sum of the actual January payment I received plus the make-up they promised, I get an amount that's actually slightly higher than what I compute from the Sept-to-Sept CPI-U numbers.
It will be interesting to see AIG found that they has a systemic error, and will correct everyone automatically. Or whether each affected individual will need to work through the AIG process.
I suspect the former, and AIG will “fix” everyone without further prodding. We’ll see.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: CPI-U adjustment too small on AIG SPIA
Good news! Thank you for sharing this. I'll report if/when I hear more on my mother's written request for this error to be fixed.RustyShackleford wrote: ↑Tue Jan 18, 2022 1:06 pm Hurray ! Just called back and they said a correction has been made. I'll be sent a make-up check for the January payment and the correct payment made going forward. Computing the expected future payments from the sum of the actual January payment I received plus the make-up they promised, I get an amount that's actually slightly higher than what I compute from the Sept-to-Sept CPI-U numbers.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
Good news, thank you.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
Hi Rusty,
Good news indeed. Just to clarify--you called AIG rather than the reverse ? The reason I ask is that I've heard nothing back, despite having made my initial call on Jan 4th, and having received a promise then of call-back or email within 3 business days--which obviously hasn't happened yet.
==> When you actually get the check, could you confirm here ? I do believe that the whole thing will be straightened out with a systemic "fix", but would not be surprised if that took a couple months. FWIW.
Good news indeed. Just to clarify--you called AIG rather than the reverse ? The reason I ask is that I've heard nothing back, despite having made my initial call on Jan 4th, and having received a promise then of call-back or email within 3 business days--which obviously hasn't happened yet.
==> When you actually get the check, could you confirm here ? I do believe that the whole thing will be straightened out with a systemic "fix", but would not be surprised if that took a couple months. FWIW.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: CPI-U adjustment too small on AIG SPIA
Yes, I called 800.242.6771 - that being the number on the last 1099-R I received (for tax year 2020). Recall I got my SPIA through Vanguard. But I also sent in a letter, to the address posted above - the Amarillo address, not the NY one.
I did not hear back from them at all. I called back today and was told that they'd corrected it.
Re: CPI-U adjustment too small on AIG SPIA
Whad'ya know ! Although I never got the promised call-back/email, I did receive a check today that fully corrects my January annuity CPI-U increment (5.4%). That works for me Now lets see if next month and on-going is correct.
Thanks to my fellow trouble-makers on this board who also called and wrote AIG. I'm persuaded that, perhaps, AIG is not a demonic entity intent on sucking my financial blood. Benefit of the doubt. But i'm withholding final judgment until after next month..
Thanks to my fellow trouble-makers on this board who also called and wrote AIG. I'm persuaded that, perhaps, AIG is not a demonic entity intent on sucking my financial blood. Benefit of the doubt. But i'm withholding final judgment until after next month..
Re: CPI-U adjustment too small on AIG SPIA
Good for you!drjbgmail wrote: ↑Thu Jan 20, 2022 5:30 pm Whad'ya know ! Although I never got the promised call-back/email, I did receive a check today that fully corrects my January annuity CPI-U increment (5.4%). That works for me Now lets see if next month and on-going is correct.
Thanks to my fellow trouble-makers on this board who also called and wrote AIG. I'm persuaded that, perhaps, AIG is not a demonic entity intent on sucking my financial blood. Benefit of the doubt. But i'm withholding final judgment until after next month..
I think this shows that AIG has recognized this is not a “one-off”, but rather is a systemic error. I expect that they’ll correct other similar policies en masse.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
I've received an email, containing an image of a letter which I probably will receive by paper mail. The subject line was simply "Mr. [Surname]" which seemed odd enough to make me leery of opening it!
The email said "Please see attached acknowledgement of your recent communication."
The page image said, in part,
So far so good...
The email said "Please see attached acknowledgement of your recent communication."
The page image said, in part,
The letter was signed by a "Senior Analyst" in the "Customer Solutions Unit" of the "AIG Life & Retirement CSU, 1050 North Western Street, Amarillo, TX 79106" and gives a phone number to contact the analyst "directly" and an email address incorporating the analyst's name.American General Life Insurance Company has received a written correspondence dated January 7, 2022. The communication was addressed to Mr. Peter Zaffino, President and CEO of American International Group ("AIG"). We are pleased to be of assistance.
We are in the process of conducting a thorough review into your questions raised. During this process you will hear from us in the near future. Once completed, we will communicate by letter the resolution.
So far so good...
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
On 1/21/2022 I received a paper check in the mail without much explanation, with the number of the annuity printed on it, and the amount--I haven't checked it exactly but it's about the right amount--to make up for the shortfall on the first monthly payment. I have two annuities and I haven't received anything about the second yet but it could well be in process. So far, so good.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
They may not be demonic, just inept. I'm not sure which is worse...
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
Re: CPI-U adjustment too small on AIG SPIA
One of my favorite memories from my time in the insurance industry was hearing the chief actuary of AIG Life, who was based in Houston, say during a heated debate in a 2005 public forum that “I can see the towers of Enron from my office”.
Little did he know that his company would nearly go the way of Enron just a few short years later.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: CPI-U adjustment too small on AIG SPIA
This is an amazing thread! It caused me to go back and look at my inflation adjusted annuity to make sure that I know how it is calculated. My annuity is from The Principal and is a deferred income annuity that starts in 2024 that I purchased in 2019. The specific wording related to adjustments:
"CPI-U BASED COST OF LIVING ADJUSTMENT RIDER
RIDER BENEFIT
This rider provides for an annual Cost of Living Adjustment (COLA) to the Annuity Income Payment after the income Start Date. We calculate the COLA on each anniversary of the Income Start Date using the all-item Consumer Price Index for All Urban Consumers (CPI-U), as published by the United States Department of Labor.
On each anniversary of the Income Start Date, We will determine a new Annuity Income Payment equal to:
1. The Annuity Income Payment on the Income Start Date, multiplied by
2. The CPI-U value for the month that is three calendar months preceding the current anniversary of the Income Start Date.
3. The CPI-U value for the month that is three calendar months preceding the Income Start Date.
If the new Annuity Income Payment would be less than the current Annuity Payment, no change will be made".
Then there is a paragraph that describes what happens if the CPI-U is discontinued. So, maybe the "three months" prior is sort of an industry standard for calculating adjustments? Also, at least in mine, the adjustment occurs based on the Income Start date so every contract will be different depending on that date.
Thanks again for all who posted and responded. I never would have guessed that an insurance company filled with smart actuaries would not be able to do a simple multiplication to calculate a new income payment. But of course it is not the actuaries doing the calculation, but some unknown, underpaid "back office" person (as Stinky pointed out). But, now I know. I will be checking my increases like a hawk!
Wrench
"CPI-U BASED COST OF LIVING ADJUSTMENT RIDER
RIDER BENEFIT
This rider provides for an annual Cost of Living Adjustment (COLA) to the Annuity Income Payment after the income Start Date. We calculate the COLA on each anniversary of the Income Start Date using the all-item Consumer Price Index for All Urban Consumers (CPI-U), as published by the United States Department of Labor.
On each anniversary of the Income Start Date, We will determine a new Annuity Income Payment equal to:
1. The Annuity Income Payment on the Income Start Date, multiplied by
2. The CPI-U value for the month that is three calendar months preceding the current anniversary of the Income Start Date.
3. The CPI-U value for the month that is three calendar months preceding the Income Start Date.
If the new Annuity Income Payment would be less than the current Annuity Payment, no change will be made".
Then there is a paragraph that describes what happens if the CPI-U is discontinued. So, maybe the "three months" prior is sort of an industry standard for calculating adjustments? Also, at least in mine, the adjustment occurs based on the Income Start date so every contract will be different depending on that date.
Thanks again for all who posted and responded. I never would have guessed that an insurance company filled with smart actuaries would not be able to do a simple multiplication to calculate a new income payment. But of course it is not the actuaries doing the calculation, but some unknown, underpaid "back office" person (as Stinky pointed out). But, now I know. I will be checking my increases like a hawk!
Wrench
Re: CPI-U adjustment too small on AIG SPIA
Wrench understands exactly how a life insurance company works.Wrench wrote: ↑Wed Jan 26, 2022 7:54 pm I never would have guessed that an insurance company filled with smart actuaries would not be able to do a simple multiplication to calculate a new income payment. But of course it is not the actuaries doing the calculation, but some unknown, underpaid "back office" person (as Stinky pointed out). But, now I know. I will be checking my increases like a hawk!
Wrench
The actuaries do the high-falutin’ product design, development, and pricing work, and get the product approved for sale.
They then pass it off to the “gnomes” in the back office - policy administration and IT types. They’re the ones who actually do the dirty work of getting the product onto the system and making it work.
Communication between these two parts of the company is sometimes difficult, and occasionally dysfunctional. Errors happen. Trust me, I’ve seen it in spades.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
- nisiprius
- Advisory Board
- Posts: 52215
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: CPI-U adjustment too small on AIG SPIA
Oh, what a mess. My current situation is like "bank error in your favor, collect $$$." Things are messed up, but the error right now is strongly in my favor.
I have two of these annuities, which I'll call A and B. Very similar except that there are two of them. Both with the same error.
So I received a paper check in the mail, representing roughly the underpayment for the first month's payment for A.
Yesterday I received a letter, referencing B and saying a check for a small round number "for the approximate difference" will arrive under separate cover shortly, and that the appropriate adjustments for 2022 will be made going forward.
So today I see not two, but three direct deposits. As nearly as I can figure out, I have received:
TWO identical payments for account A, each larger than last month's, probably for the correct amount.
ONE payment for account B which is identical to last month's and thus is slightly too small.
Anyway, at the moment the error is strongly in my favor and I'm scratching my head trying to decide the least harmful thing to do now.
I have two of these annuities, which I'll call A and B. Very similar except that there are two of them. Both with the same error.
So I received a paper check in the mail, representing roughly the underpayment for the first month's payment for A.
Yesterday I received a letter, referencing B and saying a check for a small round number "for the approximate difference" will arrive under separate cover shortly, and that the appropriate adjustments for 2022 will be made going forward.
So today I see not two, but three direct deposits. As nearly as I can figure out, I have received:
TWO identical payments for account A, each larger than last month's, probably for the correct amount.
ONE payment for account B which is identical to last month's and thus is slightly too small.
Anyway, at the moment the error is strongly in my favor and I'm scratching my head trying to decide the least harmful thing to do now.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: CPI-U adjustment too small on AIG SPIA
FWIW, I suggest letting sleeping dogs lie. If you raise questions at this point, you'll just muddy the waters further, in an already pretty muddy pond. If this is an error, at some point an audit may discover it and AIG may (or may not) adjust things.
Re: CPI-U adjustment too small on AIG SPIA
Also, the true situation (whether they've made an error) may not be clear for a month or two, and only after you've had a couple of monthly benefit payments. So that's another reason for waiting.
Re: CPI-U adjustment too small on AIG SPIA
Do nothing. Wait for February’s payments and see where things stand.nisiprius wrote: ↑Fri Jan 28, 2022 10:35 am Oh, what a mess. My current situation is like "bank error in your favor, collect $$$." Things are messed up, but the error right now is strongly in my favor.
I have two of these annuities, which I'll call A and B. Very similar except that there are two of them. Both with the same error.
So I received a paper check in the mail, representing roughly the underpayment for the first month's payment for A.
Yesterday I received a letter, referencing B and saying a check for a small round number "for the approximate difference" will arrive under separate cover shortly, and that the appropriate adjustments for 2022 will be made going forward.
So today I see not two, but three direct deposits. As nearly as I can figure out, I have received:
TWO identical payments for account A, each larger than last month's, probably for the correct amount.
ONE payment for account B which is identical to last month's and thus is slightly too small.
Anyway, at the moment the error is strongly in my favor and I'm scratching my head trying to decide the least harmful thing to do now.
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
Re: CPI-U adjustment too small on AIG SPIA
Rusty< I'm wondering whether you've received any kind of check / deposit to adjust the error ?
Re: CPI-U adjustment too small on AIG SPIA
The back office gnomes have really messed this one up.nisiprius wrote: ↑Fri Jan 28, 2022 10:35 am Oh, what a mess. My current situation is like "bank error in your favor, collect $$$." Things are messed up, but the error right now is strongly in my favor.
I have two of these annuities, which I'll call A and B. Very similar except that there are two of them. Both with the same error.
So I received a paper check in the mail, representing roughly the underpayment for the first month's payment for A.
Yesterday I received a letter, referencing B and saying a check for a small round number "for the approximate difference" will arrive under separate cover shortly, and that the appropriate adjustments for 2022 will be made going forward.
So today I see not two, but three direct deposits. As nearly as I can figure out, I have received:
TWO identical payments for account A, each larger than last month's, probably for the correct amount.
ONE payment for account B which is identical to last month's and thus is slightly too small.
Anyway, at the moment the error is strongly in my favor and I'm scratching my head trying to decide the least harmful thing to do now.
I’d do nothing right now. Wait for the dust to settle. It eventually will.
And keep a running tally as to whether you’re “ahead” or “behind”. If you do fall “behind”, raise the issue as you have in the past.
Please keep us posted.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: CPI-U adjustment too small on AIG SPIA
My mother received no reply to her January 7th letter to the Amarillo service center. So I decided to have her write (the same letter) to the CEO, a la Nisiprius. That letter was sent yesterday. Her next direct deposit is due Feb 1st. Perhaps that will reflect the change going forward, if not also including the January deficiency.
EDIT Sat Jan 29, 2022: The Feb payment posted. Same amount as January. No updated amount to reflect the error/deficiency.
EDIT Sat Jan 29, 2022: The Feb payment posted. Same amount as January. No updated amount to reflect the error/deficiency.
Re: CPI-U adjustment too small on AIG SPIA
In response to my telephone call to AIG a couple of weeks ago (at 877-299-1724), I received what seems to be the same form letter as nisiprius. I was astonished when they promised a check to "arrive under separate cover shortly", since it would certainly make more sense for AIG to use the direct deposit information they already have for me. Now, thanks to nisiprius, I know that I might or might not receive a snail mail paper check, and that I should be also looking for a direct deposit, which may or may not be correct!nisiprius wrote: ↑Fri Jan 28, 2022 10:35 am Oh, what a mess. My current situation is like "bank error in your favor, collect $$$." Things are messed up, but the error right now is strongly in my favor.
I have two of these annuities, which I'll call A and B. Very similar except that there are two of them. Both with the same error.
So I received a paper check in the mail, representing roughly the underpayment for the first month's payment for A.
Yesterday I received a letter, referencing B and saying a check for a small round number "for the approximate difference" will arrive under separate cover shortly, and that the appropriate adjustments for 2022 will be made going forward.
So today I see not two, but three direct deposits. As nearly as I can figure out, I have received:
TWO identical payments for account A, each larger than last month's, probably for the correct amount.
ONE payment for account B which is identical to last month's and thus is slightly too small.
Anyway, at the moment the error is strongly in my favor and I'm scratching my head trying to decide the least harmful thing to do now.
This whole thing is unbelievable. Somebody at AIG ought to be fired.
Re: CPI-U adjustment too small on AIG SPIA
One of the key reasons -- perhaps the key reason - that I'm not enamored with annuities is that I don't trust insurance companies to get it right and survive for as long as I need. I am more concerned about that with a SPIA, and this thread is certainly reinforcing that concern.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee