GAO: Clip 3: Comparing Pension Advances with Bank Loans
>>Recent media coverage shows that some companies are encouraging retirees to borrow against their pensions– generally referred to as pension advances– which may be an attempt to take advantage of financially distressed retirees. A GAO investigator called 19 pension advance companies, posing as a federal, military, or private-sector retiree receiving a pension, to request information about the companies and their pension advance products. Companies marketed products nationally to consumers in need of quick cash or with poor or bad credit. In this clip, representatives from two companies disclosed to investigators that it would cost them less if they went to a bank, but that their companies were an option if they couldn’t. [ Phone dialing ]>>”If you could go to a bank and do it, you’d be better off. But if you can’t, this is a– this is an option.”>>”If you have access to, like, a bank loan or being able to borrow money from a source that you would be paying back much less,”>>”Uh-huh.”>>”I always recommend that first because this is your retirement money that you’re using. It can be comparable to, like, a high-interest credit card. If you don’t have any other options or you don’t need the monthly income and you’re just wanting to use it for this reason, then of course we want to help you any way we can.”>>To learn more about federal oversight of pension advance transactions, see GAO-14-420, which you can find on our website, gao.gov.