The Michigan Attorney General’s Office is cautioning consumers of the high risks associated with pension advances.
The advances – also known as pension sales, loans or buyouts, require you to sign over all or a portion of your future pension checks, typically for a five to ten-year term. In return, consumers receive a one-time lump sum payment from the pension advance company.
However, the lump sum payment totals less than the future pension payments signed over.
The Attorney General’s office warns that not all pension advances or loans are legal. There are Michigan laws that prohibit the assignment or sale of State or local pensions. There are also federal laws that can prohibit or restrict the assignment or sale of military, federal employee and private employee pensions.
The Office warns that before you get a pension advance or loan, you should make sure you know exactly how much you’ll actually lose compared to the sum of the pension payments you’d otherwise receive.