Monterey, CA Pension Advance Or Loan Shark Advance?

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There was a very sad story in The New York Times about senior citizens who have been taken advantage of by taking loans against their pension plans, not realizing that the interest rates were well above market rates.  Dubbed pension advances, these transactions are not advances at all but loans disguised as advances, according to authorities.  Many seniors which have been put under pressure by the economic downturn and the rash of cuts in services due to state and federal budget cuts felt they could pull some money out of their money and put it back later.  One ad on the web targeting veterans says, "You've put your life on the line for Americans to protect our way of life.  You deserve to do something important for yourself."  Sadly, these are Internet loan sharks in disguise.  An analysis by The New York Times of dozens of contracts found that interest rates ranged from 27% to 106%.  Worse, this information was not disclosed in the contracts.  To qualify for the so-called advances, many seniors have had to take out a life insurance policy which names the lender as the sole beneficiary.  Legal aid offices in California told reporters that they have seen a surge in complaints from retirees regarding these loans.  This is absolutely shameful, and I hope authorities prosecute these firms and put them out of business now that more attention has been focused on the practice.

Please note that this blog reflects my personal opinion and may or may not reflect the opinion of Hands To Help Seniors and the individual members comprising the Board of Governors.