NEWS RELEASE ISSUED BY THE OFFICE OF MISSOURI STATE TREASURER CLINT ZWEIFEL
State Treasurer Clint Zweifel warns Missourians about pension advances and seeks legislative restrictions on practice
Treasurer Zweifel calls on public to share experiences with this practice in Missouri
JEFFERSON CITY – State Treasurer Clint Zweifel (ZWY-ful) today issued a warning to Missourians about an increasingly common practice called a pension advance, an agreement that promises fast access to cash but can ultimately cost retirees thousands in interest and fees. Treasurer Zweifel is asking the public to let him know if they have been approached by businesses promoting this offer and has asked Attorney General Chris Koster to join him in an investigation of the practice in Missouri.
“Missourians are known for being hard-working and our retirees deserve every protection they can get,” Treasurer Zweifel said. “Unfortunately, there are businesses that prey on those retirees in difficult situations. Retirees are faced with medical bills, bills for aging parents and their own long-term care. Financial decisions can be difficult. Pension advance contracts are unregulated and often do not fully disclose the effective interest rate and other fees associated with them. These businesses are not held to the same standards as banks and life insurance companies. I want Missourians to be aware of this and to ask questions before making decisions that could impact them and their families for years to come.”
Pension advances are a financial instrument where an individual with a pension receives an up-front, lump-sum payment in exchange for contracting away a portion of that individual’s pension payment. Media reports indicate that monthly payments made by the borrower can be subject to effective interest rates of 27 to 106 percent.
Treasurer Zweifel is asking Missourians to let him know if they have been approached by businesses promoting this offer. To share your experience, go to his website treasurer.mo.gov and click on the Pension Advance Portal.
Treasurer Zweifel will be working with members of the General Assembly to propose legislation that will prohibit any company from offering this product in exchange for public pensions in the state of Missouri. This includes city, fire, police, state and teacher pensions. The federal government has already passed similar legislation prohibiting these agreements with regard to military pensions.
“Congress did the right thing when they protected veterans’ pensions from this unscrupulous practice and we need to take it one step further here in Missouri,” Treasurer Zweifel said. “Pension advances are wrong. We should and can prevent these businesses from operating in Missouri. We do not need bad actors preying on our retirees and their hard-earned retirement benefits.”
This is an ongoing issue nationwide. In May, New York Governor Anthony Cuomo directed his Department of Financial Services to launch an investigation into pension advances. The United States Senate Health, Education, Labor and Pensions (HELP) Committee has created a bipartisan subcommittee to investigate this practice and pension sales.
A copy of the letter Treasurer Zweifel sent to Attorney General Koster is available here.
“I appreciate Treasurer Zweifel bringing the issue of pension advances to our attention,” Attorney General Koster said. “After years of public service, no one should be taken advantage of in their retirement years. I look forward to working with Treasurer Zweifel to protect Missouri consumers by investigating how pension advances are being conducted in our state.”
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