The state treasurer is warning retired Missourians about a threat to their pensions. Advertisements have been popping up for “pension advances,” which offer an up-front, lump-sum payment in exchange for signing away a part of a pension.
Treasurer Clint Zweifel says these advances are particularly tempting for individuals who are desperate for money to pay bills for themselves or aging parents.
“These schemes take advantage of retired employees during tough financial times, charging sky-high fees and interest rates. Effective interest rates have ranged up to 106 percent but they can be even higher than that. As State Treasurer it’s my job to protect Missourians from schemes that threaten their retirement security.”
Zweifel says these advances are not classified as a loan or a security.
“They’re really in some sort of Purgatory in terms of regulatory environment. What it means is that these folks are really taking advantage of Missouri seniors, and they’re threatening their retirement security with these instruments … and really no consumer protections in place for the individual borrower.”
Zweifel says it is not known how many Missourians might have already entered into a pension advance agreement. He says his office is working with that of Attorney General Chris Koster to investigate.
“That process is beginning through conversations I’m having with the public, but also online there’s a portal on my website, treasurer.mo.gov, where individuals can share experiences they’ve had in dealing with any of these companies, whether they’ve been approached or done business with them.”
Zweifel says he is also talking to state and federal lawmakers about combatting the practice legislatively.