Many media outlets have had stories in the past few weeks about the attention given by federal and state officials to pension factoring. Two of the more recent Secondary Insurance Market Blog posts on the subject, containing links and round-ups of such stories, are here and here.
And then there is the ABC News story that appeared under the headline ‘Selling Your Pension For Cash Lump Sum: Pros, Mostly Cons’. The story begins with a reference to the Old Testament story of Esau and Jacob:
The Bible says Jacob’s brother sold his birthright for a mess of stew. Today, warn financial watchdogs, America’s pensioners are in danger of accepting what can sometimes be a comparably smelly deal: “Sell us your pension benefits,” say advertisements, “and we’ll give you one big lump sum now, up front.”
For somebody who’s facing doctor bills or has missed a mortgage payment, a lump sum can be tempting. Partly for that reason, pensioners in growing numbers are accepting such offers, say financial regulators. But not all offers are legal, and some contain hidden costs.
Earlier this month, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) issued a joint investor-alert cautioning pensioners to think twice before accepting cash-up-front deals.
The full ABC News story is available beginning here.