Exchanging future pension payments for a lump sum is a costly transaction. By Eleanor Laise, From Kiplinger's Retirement Report, September 2014 Follow @EleanorLaise
It sounds like a win-win: Retirees looking for fast cash sell their future monthly pension payments, and individual investors who are buying them get steady income. But retirees on both sides of such transactions are getting hurt, regulators and consumer advocates say.
State and federal securities regulators, along with the Federal Trade Commission and the U.S. Government Accountability Office, are casting a critical eye on "pension advance" transactions. In these deals, a consumer signs over to a pension-advance company a certain number of future monthly pension or disability payments in exchange for a lump sum, which can be significantly less than the value of the future payments.
