New Bill Would Protect Federal Retirees from Predatory Lenders

Legislation would target companies offering unfair ‘pension advances’ to veterans and former feds.

A bipartisan group of House lawmakers will introduce legislation this week to protect federal, postal and military retirees from predatory lenders who target the retirees’ pensions.

The Annuity Safety and Security Under Reasonable Enforcement -- or ASSURE -- Act, sponsored by Rep. Matt Cartwright, D-Pa., would expand the 1968 Truth in Lending Act’s disclosure provisions to cover lenders who issue loans on federal pensions. Predatory lenders often disguise these loans as “pension advances,” Cartwright said.

The bill would increase transparency on any payment to a retiree that “diminishes the benefit recipient’s ability to control the payments from their federal or military pension in any way,” and would task the Consumer Financial Protection Bureau with oversight authority.

An April analysis by The New York Times found the average effective interest on these loans ranges from 27 percent to 106 percent. By disguising the loans as an “advance,” lenders took advantage of federal and military retirees by hiding the fees.

In addition to creating more transparency and oversight of these loans, Cartwright’s bill would set the maximum interest rate on them at the “prime rate” -- a widely used benchmark in setting interest rates -- plus 6 percent. The ASSURE Act would also create a “private right of action,” effectively allowing retirees to sue lenders who break 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,” Cartwright said in a statement to accompany the bill, which he will officially introduce Wednesday.

While federal statute already prohibits federal and military retirees from handing over their pensions to a third party, many companies have found workarounds that require retirees to sign over part of their annuity payments to the lender while paying high interest rates.

“Federal pensions have long ensured that after a lifetime of service, veterans and federal employees would be able to live out retirement with dignity,” said Rep. Gerry Connolly, D-Va., the bill’s primary co-sponsor. “It’s our duty to protect retirees from unscrupulous lenders looking to make a quick profit.”

Connolly added that senior citizens lose about $2.9 billion annually to financial exploitation, and  it would be “unconscionable” for Congress to reject this bill.

As of Monday, 31 House Democrats and Republicans had signed on as co-sponsors. Federal employee groups such as the American Federation of Government Employees, National Active and Retired Federal Employees and the American Postal Workers Union have announced their support of the measure.

(Image via ronfromyork/