It’s financial risky and potentially dangerous to take an advance on your pension. ConsumerMojo’s story Pension Advance Plans Take a Big Bite really explains exactly how pension advance plans operate, who is victimized e and what some states are doing to curb the practice.
In New York State. Governor Andrew Cuomo’s team launched one of the largest investigations. Cuomo said he asked the Department of Financial Services (DFS) to investigate pension advances because, “These companies are literally harvesting the hard-earned pensions of seniors, military veterans and other hard-working New Yorkers. Using deceptive practices to cheat people out of their pensions by enrolling them in backdoor high-interest loans will not be tolerated in our state.”
How it works
To get a pension advance you must agree to give up a portion of your weekly or monthly pension in return for a lump sum upfront. The interest rate can be more than 100 percent and that can chop off a good portion of your pension.
Benjamin M. Lawsky, Superintendent of Financial Services, said, “These pension advances appear to be nothing more than payday loans in sheep’s clothing. Pension harvesting schemes that hit financially strapped retirees with sky-high interest rates and hidden fees are simply unacceptable. It’s especially disturbing that military veterans – who earned their pensions defending our country – are apparently being targeted through these abusive products.”
Lawsky’s agency sent subpoenas to the following companies:
1. LumpSum Pension Advance
2. Pension Funding LLC
3. Pensions Annuities & Settlements LLC
4. Pension Income LLC
5. Cash Flow Investment Partners
6. DFR Pension Funding
7. Veterans Benefit Leverage
8. Voyager Financial Group LLC (Pension4Case/Cash Out My Pension/Buy Your Pension)
9. First American Finance Corporation
10. Investing Forward (Termbrokers LLC)
The message here is to beware and stay away from pension advance schemes.
Key Steps for Planning for Retirement: more information about protecting yourself and your assets.