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Pension Advances

When you take out a pension advance, you are basically taking out a loan against your military, government, or corporate pension. Think twice before you sign, because these loans often charge extremely high interest rates. Companies offering these products try to disguise them and avoid referring to them as loans, because their interest rates are often much higher than North Carolina law allows.

Don’t be fooled by the slick marketing.

Companies that push pension advances often pretend to be in the business of helping military and other retirees to “Take control of your pension and your life.” In fact, they prey on people who are having financial difficulties. The companies promise fast, lump-sum cash payments without making it clear that you are raiding your pension and bargaining away much of your future on a loan that may have an interest rate of 50 to 100%, or more.

Don’t forget, this would affect your spouse too.

Your spouse may have to sign away their right to receive any pension payments until the loan has been repaid, a period that can be as long as eight years. If you die or divorce during that period, they could be left with no pension income during a time when they would probably need it the most.

Before you consider a pension advance:

  • Look for alternatives. There may be other ways to address your current financial problems, like a home equity loan or another legitimate loan from a bank, savings and loan, or credit union. Even credit cards (which you would normally avoid using to pay off debts, because of the relatively high interest rates they charge) are often a better choice than taking out a pension advance.
  • Consult with a financial advisor or an attorney. Make sure you understand the legal and financial ramifications of signing away your pension for any period of time, including the impact on your taxes.

Contact us for more information about pension advances at 1-877-5-NO-SCAM, toll-free from within North Carolina. If you have already entered into an agreement for a pension advance you can file a complaint or contact us for help.