If you live in Missouri, pension advances are out.
The Show-Me-State is the first in the nation to prohibit pension advances targeting public employees. Victims are often seniors, struggling to pay medical bills or care for aging loved ones. Companies promise to provide an upfront lump sum in exchange for all or a portion of a pension benefit. The schemes were unregulated in Missouri. Some plans have interest rates as high as 106 percent.
House Bill 1217 prohibits this practice and provides the Attorney General with the authority to enforce the ban and help victims reclaim money.
"If you hear a business talking to you about you might want to consider a pension advance, the first thing you should do is run for the hills. This is bad for consumers. Bad for retirees. What we want to do in Missouri is prohibit this practice. That's why we are the first state in the nation to do this," said Clint Zweifel, Missouri State Treasurer.
The Treasurer is asking anyone who is approached with these offers to report them on his Pension Advance Portal.
*News release from State Treasurer's office.
JEFFERSON CITY – State Treasurer Clint Zweifel (ZWY-ful) today thanked Governor Nixon for signing House Bill 1217 into law, officially making Missouri the first state in the nation to prohibit pension advances targeting public employees. This issue has received national attention including consumer alerts from the CFPB, FTC and GAO.
“Today, Missouri became the first state in the nation to shut its doors to these predatory businesses,” Treasurer Zweifel said. “House Bill 1217 will ensure that pensions earned by our teachers, fire fighters, police officers and other public servants are protected. I am proud that yet again Missouri is leading by example, and I thank Governor Nixon for signing this bill into law.”
Victims of pension advance schemes are often seniors, struggling to pay medical bills or care for aging loved ones. Companies promise to provide an upfront lump sum in exchange for all or a portion of a public pension benefit, but these schemes are currently unregulated in Missouri and agreements can easily be misrepresented to the borrower. Pension advance schemes often include costly fine print such as interest rates as high as 106 percent. In some cases the borrower is required to take out a life insurance policy and name the company as the sole beneficiary in order to ensure payment.
House Bill 1217 prohibits this practice and provides the Attorney General with the authority to enforce the ban and ensure victims of pension advances will be allowed to reclaim any money lost during these transactions. The Treasurer is asking anyone who has been approached with these offers to report them on his Pension Advance Portal as he works to protect Missouri consumers.
Treasurer Zweifel has led discussions with leaders in other states to ensure businesses offering pension advances are prevented from preying on citizens, most recently resulting in a new law in Vermont regulating the practice.
House Bill 1217 also contained Treasurer Zweifel’s legislative priority pertaining to felony pension forfeitures. This portion of the new law will prevent public employees in certain retirement systems from collecting a pension if they have been convicted of certain felonies that breach the public’s trust in connection with their job.
“This is about adding another layer of protection for Missouri taxpayers against abuse or misappropriation of public funds,” Treasurer Zweifel said. “House Bill 1217 is a measure that strengthens government accountability and is prudent fiscal policy. I am proud of the bipartisan support that has made it possible. I thank Rep. Dugger for sponsoring this bill and Sens. Cunningham, Dixon and Sater for working to get it across the finish line.”
Treasurer Zweifel protects and invests Missouri’s $3.6 billion portfolio and is a trustee on the Missouri State Employees’ Retirement System (MOSERS) board, protecting Missouri retirees by managing their retirement funds and investments.
Governor Nixon has now signed all of Treasurer Zweifel’s 2014 legislative priorities. In addition to the pension advance and felony forfeiture provisions in House Bill 1217, the Governor signed House Bill 1693 which will allow Treasurer Zweifel to begin the process of returning more than $1 million in unclaimed U.S. savings bonds to the Missourians who purchased them.