Friday, June 15, 2012

Veterans lump sum pension payouts are a rip off

Ever hear of annuity utilization contracts?

If you are a retired member of the armed forces, you are drawing a pension that is attractive to illegal operators who want a piece of it. Your pension may not seem like it is big enough, so these companies entice you with a lump sum payment in return for you paying them your monthly check for many months.

It usually works like this. Say you are drawing $1,000 a month. In 5 years, that's $60,000. These companies will offer you a lump sum payment of $30,000 in return for your check for the next 5 years. That means you pay them $60,000 to get $30,000. That's 100% interest over the life of this so-called loan.

What makes it more attractive, is the longer you agree to pay, the more they will give you. You could get $100,000 and need to be paying your whole pension for a long time.

These are not good deals. And newly retired service members seem to be an easy mark. They are a little younger and a lump sum looks very good. Don't do it.

Here's the rub. Companies that do this with military pension are 99.99% illegal. Some even go out of business.

These are called, annuity utilization contracts. Beware of getting ripped off.

If you recently retired from the military, you are probably being targeted. They even sound legit. Many companies have official sounding names, like "Retired Military Financial Services." They are anything but legit. Ignore anything related to military pensions and loans. They will even lie and say it's not a loan. That they are just buying your pension for a lump sum. Many of these mailers or websites look very patriotic, all red, white, and blue.

Don't fall for one of these scams. You lose an awful lot of money.

Like stated earlier, these annuity utilization contracts, or military pension loans are for the most part illegal.