The Oligarch Recovery – U.S. Military Veterans are Selling Their Pensions in Order to Pay the Bills

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Moore soon found himself two months behind on rent and at least 10 days from payday. In bed that night, he saw a TV ad for Future Income Payments, a company based in Irvine, Calif., that buys pensions in exchange for a lump sum. The company said it had worked with military personnel and government workers. Ten minutes later, he got up and made the call.

The next day, a company representative called Moore back and explained that he would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years  — a total of $30,600.

If it were a typical loan, that would amount to $25,600 in interest — a rate of 512 percent.

Most of the companies advertise nationally on news sites and in military magazines, consumer advocates say. One ad highlighted in the recent congressional hearing on pension advances featured two smiling people in uniform below the words “This is our America.”

The effective interest rates charged by pension advance companies can be abusive, Cartwright said. But it is particularly “egregious” that the companies go after military retirees, targeting income streams that are backed by the federal government, he added.

– From the Washington Post article: Some Retirees are Making a Terrible Mistake with their Pensions 

Welcome to the oligarch recovery. An economic rebound so robust that an ever increasing number of Americans are being forced to borrow money at usurious rates just to pay the bills. Today, I want to introduce you to the latest scheme to profit from poverty: Pension Advance Companies.

Here’s some of the Washington Post’s article on the subject from today:

Keith Moore, a 40-year-old military veteran recovering from post-traumatic stress disorder in Oklahoma, remembers the day last year when he sold off a chunk of his pension.

He had left the military after 21 years of service, because his disabilities — PTSD, arthritis and other injuries — made it difficult to work.  But the transition to civilian life came with a different struggle: the need to provide for his family and pay the same bills with only half the paycheck.

Moore soon found himself two months behind on rent and at least 10 days from payday. In bed that night, he saw a TV ad for Future Income Payments, a company based in Irvine, Calif., that buys pensions in exchange for a lump sum. The company said it had worked with military personnel and government workers. Ten minutes later, he got up and made the call.

The next day, a company representative called Moore back and explained that he would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years  — a total of $30,600.

If it were a typical loan, that would amount to $25,600 in interest — a rate of 512 percent.

Pension advances are complex products that offer retirees a lump-sum cash advance in exchange for all, or part, of their future pension payments. Consumer groups say they are pitched disproportionately to retired military members and federal retirees.

Future Income Payments is just one of the companies that offer such products. In a 2014 report, the Government Accountability Office identified 38 companies that had recently offered pension advances. At least 30 of the 38 companies were affiliated with one another in some way, sharing a parent company, a broker or another business relationship.

Future Income Payments did not return calls seeking comment.

Would you return a phone call when your business model consists of peddling 500% interest rate loans to broke U.S. military veterans?

Most of the companies advertise nationally on news sites and in military magazines, consumer advocates say. One ad highlighted in the recent congressional hearing on pension advances featured two smiling people in uniform below the words “This is our America.”

Because pension advance companies can describe their products as pension sales and not loans, they often avoid some of the stricter oversight required of lenders. That includes laws that protect consumers from high interest rates and regulations that require lenders to clearly disclose the interest rates consumers will face.

The effective interest rates charged by pension advance companies can be abusive, Cartwright said. But it is particularly “egregious” that the companies go after military retirees, targeting income streams that are backed by the federal government, he added.

Moore said that in hindsight he should have read the paperwork more closely. But at the time, he was worried about providing for his family.

His pension payments weren’t large enough to cover rent and electricity and other expenses for his wife and two children. Things piled on in the spring of 2014 when his car broke down.

Of course, this is just the latest example of average Americans being preyed upon as they descend further into inescapable poverty. Recall:

Use of Alternative Financial Services, Such as Payday Loans, Continues to Increase Despite the “Recovery”

The Oligarch Recovery – 30 Million Americans Have Tapped Retirement Savings Early in Last 12 Months

Another Tale from the Oligarch Recovery – How a $1,500 Sofa Costs $4,150 When You’re Poor

Thanks for playing suckers:

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In Liberty,
Michael Krieger

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7 Comments

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  1. This has always gone on. These are simply the modern day manifestations of the slime that would rob the dead on the battlefield or in their graves.

    Our culture has become consumed by greed and the desire to get something for nothing. An evil now so pervasive, it is proving to be our downfall…

  2. He should have talked it over carefully with his wife. These people need to work within their communities and families for help. Problem is, that old “get the government’s help” is the worst advice of all. What did that veteran think during all those years of service? The military is huge, it’s way too large to support.

    • you are a blubbering imbecile.

    • Seriously? He should have realized that the military was too big to support the pensions that were promised to them? He should have, at some time during his service to his country (during an enlistment) decided the federal government no longer needed the services of its military? You obviously have no idea how the military functions, what it means when you enlist, or how it is funded. You should look some time. These people sacrifice their lives for your right to say stupid shit like that.

  3. Disgusting. How is this legal?

  4. Yes, I am a veteran. In a manner of speaking I knew going in that the promises were just empty paper. What I didn’t expect was to be abused the whole time I was in the service by the imperialist Dick Cheney types. Nor did I anticipate that after getting out of the service these types would continue the abuse. I admit I have since learned this though I am still vulnerable. Is there any candidate that will protect our fourth amendment rights?

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