A consumer advisory regarding pension advances has been issued by the Consumer Financial Protection Bureau.
A pension advance is a cash advance in exchange for future pension payments. These companies often charge high interest rates and fees. Although it is illegal for lenders to take a military or veterans’ pension, these people have still been offered pension advances.
Retirees and military veterans are often those that rely on pensions, and are therefore the targets of pension advance advertising.
The CFPB has three main pieces of advice related to protecting your pension. First, consumers should avoid loans with high fees and interest. Pension advance companies will not always advertise the fees and interest terms, but consumers should do their research before signing anything. Consumers should also not allow companies to have any control over their benefits or to make automatic withdrawals of payments and fees. Finally, don’t buy any life insurance policies that you do not want or need. Pension advance companies can require consumers to sign up for life insurance and list the company as the beneficiary.
Please share this PDF guide from the CFPB with friends, family, or clients who may be considering pension advances: PDF Guide from CFPB.
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