WASHINGTON – The American Federation of Government Employees expressed its support for legislation introduced today by Rep. Matt Cartwright that would protect federal civilian and military retirees from losing their pensions to unscrupulous companies.
Cartwright’s legislation, called the Annuity Safety and Security Under Reasonable Enforcement (ASSURE) Act, would create simple safeguards and consumer protections to help prevent retirees from being scammed out of their life savings by so-called “pension advance” companies.
“Federal retirees and military veterans risk losing everything they have worked so hard to save by unknowingly signing away their pensions to companies that are nothing more than glorified loan sharks,” AFGE National President J. David Cox Sr. said. “Rep. Cartwright’s bill would close loopholes in existing Truth in Lending laws and empower federal retirees and veterans to recover money they have lost to these deceitful companies.”
Even though federal law already prohibits federal and military retirees from assigning their pensions to a third party, “pension advance” companies skirt the law by requiring retirees to deposit their pensions into separate bank accounts controlled by the companies. In addition, borrowers must sign over all or part of their monthly pension checks and get saddled with interest rates that often are many times higher than those on credit cards. One loan even requires borrowers to take out a life insurance policy that names the lender as the sole beneficiary.
Cartwright’s bill would expand the Truth in Lending Act disclosure provisions to any situation in which federal or military pensions are used as consideration for an advance. The bill would cap the interest rate on such advances at prime plus six percent. The bill also would create a private right of action, meaning individuals could sue to recover money they have lost, along with associated damages, court costs and attorneys’ fees.
“It’s disgraceful that some companies earn their living by destroying the life savings of federal and military retirees. But it would be downright reprehensible for Congress not to do everything it can to protect these public servants from further harm,” Cox said.