Lawmakers Push for Action as Seniors Suffer from Pension Schemes
Democratic Reps. Gerald Connolly of Virginia and Matt Cartwright of Pennsylvania in a recent opinion piece made a push for legislation they introduced late last year that would protect veterans and federal retirees from pension advance schemes.
The editorial Pension Predators Continue to Prey on Seniors was published in political trade publication The Hill after a Government Accountability Office report was published detailing the results of an undercover investigation into companies targeting and preying on retirees via pension advance schemes.
These companies market to financially unstable retirees and trade their future pension payments in exchange for a lump sum of cash. However, the cash payment is generally worth far less than their pension value. These pension advance companies are mostly Web-based and “operate sophisticated marketing campaigns that target financially vulnerable retirees with poor credit, and carefully structure their products in an attempt to skirt state and federal caps on interest rates and disclosure rules,” wrote the lawmakers.
The GAO found that most of the products offered to seniors had annual interest rates ranging from 27 percent to 46 percent, which far exceeds the legal limit for credit cards and loans in many states. The lawmakers also cite the GAO findings that in some cases pensioners are required to buy life insurance and list the pension advance firm as a beneficiary to protect the firm from loss if a pensioner dies before repayment.
The Federal Trade Commission said it hasn’t received enough complaints about this pension scheme practice to “justify diverting resources to review enforcement options,” according to the lawmakers, who urged Congress to pass their related legislation “The Annuity Safety and Security Under Reasonable Enforcement Act.”
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