A growing trend in the financial marketplace is the “buying” of pensions or a portion of pension payments for a lump sum or cash advance. These cash advances offered by pension advance companies can have major repercussions and decrease future pension payments with high interest and fees. The Consumer Financial Protection Bureau released a blog and included a printer-friendly handout to share tips to protect pension funds. See the three tips below and share with those you know who may be considering this as an option.
Here are 3 things you can do to protect your retirement pension:
- Avoid loans with high fees and interest. Pension advance companies may not always advertise their fees and interest rates, but you will certainly feel them in your bottom line. Before you sign anything, learn what you are getting and how much you are giving up.
- Don’t sign over control of your benefits. Companies sometimes arrange for monthly payments to be automatically deposited in a newly created bank account so the company can withdraw payments, fees and interest charges from the account. This leaves you with little control.
- Don’t buy life insurance that you don’t want or need. Pension advance companies sometimes require consumers to sign up for life insurance with the company as the consumer’s beneficiary. If you sign up for life insurance with the pension advance company as your beneficiary, you could end up footing the bill, whether you know it or not.
For more information please visit www.consumerfinance.gov