Cartwright Introduces Bipartisan Effort to Halt Exploitation of Veterans and Federal Workers
Washington, DC – Today, U.S. Representatives Matt Cartwright and Gerry Connolly introduced the bipartisan Annuity Safety and Security Under Reasonable Enforcement (ASSURE) Act, with the support of 24 colleagues.
The legislation aims to protect federal workers, military retirees, and postal retirees by expanding Truth in Lending Act disclosure provisions to any situation where a federal or military pension is used as consideration for an “advance.” The bill also caps the interest rate on such an “advance” at prime plus six percent.
“Federal annuities were designed to provide retirees with a stream of guaranteed income that gives them a sense of financial security in their golden years,” Rep. Cartwright said. “Unfortunately, ‘pension advance’ companies often prey upon federal retirees and veterans.”
The legislation also addresses the lack of a private right of action in many of the applicable federal statutes that prohibit pension assignments. This means that private individuals may not sue to enforce laws that are already on the books, instead it is up to governmental authorities to take action. This legislation would create a private right of action allowing for the recovery of treble damages, court costs, and attorneys’ fees.
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.
“While current federal law already prohibits federal and military retirees from assigning their pensions to a third party, many companies have resorted to skirting state and federal laws by requiring the retiree to deposit his or her pension in a separate bank account controlled by the firm,” Rep. Cartwright said. “Moreover, firms refer to the product they sell as a “pension advance” rather than a loan. In reality, these “advances” require borrowers to sign over all or part of their monthly pension checks and carry interest rates that are often many times higher than those on credit cards.”
“Federal pensions have long ensured that after a lifetime of honorable service, veterans and federal employees would be able to live out retirement with dignity and security,” said Rep. Connolly. “It’s our responsibility to help protect retirees from unscrupulous lenders only looking to make a quick profit.”
A review by The New York Times of more than two dozen contracts for pension-based loans found that after factoring in various fees, the effective interest rates ranged from 27 percent to 106 percent — information not disclosed in the ads or in the contracts themselves. Furthermore, to qualify for one of the loans, borrowers are sometimes required to take out a life insurance policy that names the lender as the sole beneficiary.
Most recently, in March 2015 the Consumer Financial Protection Bureau (CFPB) issued a consumer guide and advisory concerning pension advances and loans. The notice warned that many of these companies use “patriotic-sounding names or logos and even claim they are endorsed by the VA as a way of enticing potential customers”
Cartwright summarized his effort, “These simple measures will protect retirees who spent a lifetime earning a federal annuity, an annuity to which they’ve contributed each paycheck, from exploitation; allow individuals to assert their rights in court; and ensure that people maintain their financial independence.”
Cosponsors: Blumenauer, Brownley, Conyers, Cummings, Delaney, Edwards, Frankel, Garamendi, Jackson Lee, Thompson (MS), Jones, Kaptur, Kelly (IL), Kirkpatrick, Langevin, Lujan Grisham, Lynch, Norton, Pocan, Schakowsky, Takano, Tsgonas, Van Hollen
Supporting Organizations: American Federation of Government Employees (AFGE), Federal Managers Association, National Federation of Federal Employees, Professional Aviation Safety Specialists (PASS), National Active and Retired Federal Employees Association (NARFE), Senior Executives Association, Professional Managers Association (PMA), Military Order of the Purple Heart, Retired Enlisted Association, American Foreign Service Association, American Postal Workers Union (APWU)