Borrowing against pensions puts retirees at risk
To retirees, the offers can sound like the answer to every money worry: convert tomorrow’s pension cheques into today’s hard cash through so-called pension advances -- a cash-strapped retiree's answer to a pay day loan.
But programs like these are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and actually plunging them further into debt, the New York Times reports.
The advances, federal and state authorities say, are not advances at all, but actually carefully disguised loans that require borrowers to sign over all or part of their monthly pension cheques.
And while not yet widespread in Canada, critics worry that the practice might soon migrate across the border.