Considering A Pension Advance? Ask These 5 Questions
Saturday, May 18, 2013 - 1:52 PM
There is a growing danger that threatens the financial security of retirees who should have been relatively insulated from the market setbacks of recent years: people with defined-benefit pensions.
Unlike people in 401(k) plansand other defined-contribution vehicles, people with defined-benefit pensions don't see their retirement benefits bounce up and down with the market. Instead, their benefits are guaranteed by their former employers. With the corporate community having largely abandoned defined-benefit pensions, it is often government employees, including military personnel, who are still covered by these plans.
The threat comes in the form of pension advance loans, which often employ predatory terms that can greatly reduce the value of a retiree's benefits.