AG Warns Against Pension Advances

The Michigan Attorney General’s office is warning seniors about the dangers of pension advances. Pension advances, also known as pension sales, loans or buyouts, require a person to sign over all or a portion of future monthly pension checks, typically for a five to ten-year term. In return, consumers receive a one-time lump sum payment from the pension advance company for an amount less than the total future pension payments signed over. The Attorney General’s office warns that the rates and other fees associated with pension advances are often high, typically ranging from 27% to 106% a year, adding that getting such a loan can bump someone into a higher tax bracket. Anyone who signs up for one should be very careful, and seek more information on the company with which they’re dealing. The AG’s office says that not all pension advances or loans are legal.