Companies that are in the business of engaging in pension factoring, or pension advance, transactions are again coming under official scrutiny following developments in courtrooms and legislative forums, according to a recent news report.
“Some retirees are making a terrible mistake with their pensions,” reported The Washington Post this week in a story that described the experiences of individuals entitled to receive military and government pensions who sold the rights to receive the future payments in what some say are legally-questionable types of transactions.
Reported the Post:
The complicated products, and the companies that offer them, are receiving renewed attention from consumer advocates, legislators and federal regulators. In August, the Consumer Financial Protection Bureau and the state of New York filed a lawsuit against two companies and their owners for misrepresenting the products as a sale and not a loan, and for failing to properly disclose all of the fees and interest rates consumers would face. Late last month, a Senate panel held a hearing on the subject.
And on Wednesday [October 21], Reps. Matthew Cartwright (D-Pa.) and Gerald E. Connolly (D-Va.) reintroduced a bill that would cap interest rates on pension advances sold to military members and federal retirees.
The Post’s story is available in full here.