American International Group Inc has asked former employees of its Financial Products unit for information about how much they earned elsewhere after leaving the company as it prepares to hand them retention payments, a source familiar with the matter said on Monday.

The payments, which critics call bonuses under another name, are due to laid-off employees under their contracts as the unit dismantles its operations.

AIG Financial Products would reduce the amount of retention payments to these former employees by the amount they have earned elsewhere since leaving the company, the source said, declining to be named because the letters are not public.

About 70 people are eligible to get these payments and the letters were sent out late last week, the source said.

AIG, which is nearly 80 percent owned by the U.S. government after a $182 billion taxpayer bailout, caused a public outcry over retention payments to Financial Products employees, the unit that was behind its near collapse in September 2008.

It paid $165 million last year to employees of Financial Products unit and was due to pay out another $195 million later this month.

But many AIG Financial Products employees, including almost all current staff eligible for these payments, agreed last month to take a $20 million cut in return for an early payment.

The rest of the current and former employees eligible for these payments are due to be paid by March 15 under their contract.

AIG declined to comment.

Separately, AIG agreed to sell its Asian life insurance unit to Britain's Prudential

for about $35.5 billion.

(Reporting by Paritosh Bansal; Editing by Richard Chang)

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