House legislators are working on a bill to create the Annuity Safety and Security Under Reasonable Enforcement (ASSURE) Act, which would protect retired federal and military personnel from predatory "pension advances." While federal statute forbids the transfer of pensions to a third party, some companies have discovered loopholes that let them skirt the law.
According to an analysis by the New York Times this spring, lenders that issue loans on federal pensions charge an effective interest rate ranging from 27 percent to 106 percent; they also deceive borrowers by camouflaging the fees. The ASSURE Act, slated for formal introduction on Oct. 23, would expand disclosure requirements under the Truth in Lending Act to include these lenders. Besides enhancing transparency and regulation, the bill would limit interest on pension advances to the prime rate plus 6 percent as well as give borrowers the right to take lenders to court if they violate the rules. "These simple measures will protect federal retirees from exploitation, allow individuals to assert their rights in court, and ensure that retirees maintain their financial independence," said bill sponsor Rep. Matt Cartwright (D-Pa.). The proposal has at least 31 co-sponsors from both sides of the aisle.