Benefits July 9, 2014

GAO Finds Questionable Pension Advance Practices

July 9, 2014 (PLANSPONSOR.com) – An investigation by the U.S. Government Accountability Office (GAO) recently identified questionable practices of companies that offer retirees pension advances.
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As part of its investigation, the GAO identified at least 38 companies that offered individuals lump-sum payments or advances in exchange for receiving part or all of their pension payment streams. These companies used multistep pension advance processes that included various other parties. The GAO investigation report says at least 21 of the 38 companies were affiliated with each other in ways that were  inapparent to consumers. Findings also show that all of the companies operated primarily as Web-based companies and that some targeted financially vulnerable consumers who had poor or bad credit nationwide.

According to the report, the GAO received offers from six out of 19 pension advance companies. These offers compared unfavorably with other financial products or offerings such as loans and lump-sum options through pension plans. For example, the effective interest rates on pension advances offered to the GAO during its undercover investigation typically ranged from approximately 27% to 46%—at times close to two to three times higher than the legal limit set by the pertinent state on interest rates assessed for various types of personal credit.

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As a result of its findings, the GAO recommends that the Bureau of Consumer Financial Protection (BCFP), as well as the Federal Trade Commission (FTC), review the pension advance practices identified in the report and exercise oversight as needed. The FTC reports it has not taken any public enforcement actions, due in part to not receiving many complaints related to this topic. The bureau says its oversight has been limited to instances where the products met certain criteria.

The GAO also notes that consumers who are vulnerable to financial exploitation may lack the information needed to make sound decisions when it comes to pension advance transactions. The report recommends that, since the Bureau of Consumer Financial Protection facilitates coordinating federal financial education, it could help ensure that information reaches relevant pensioners.

The report documenting the results of the GAO investigation:

  • Describes the number and characteristics of pension advance companies and marketing practices;
  • Evaluates how pension advance terms compare with those of other products; and
  • Evaluates the extent to which there is related federal oversight.

Report highlights, as well as the full version, can be found here.

Deals and People July 9, 2014

Transamerica Names Regional Retirement Plan Sales Leader

July 9, 2014 (PLANSPONSOR.com) – Transamerica Retirement Solutions has named Bill Feldmaier as division vice president for the company’s central region retirement plan sales.
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Feldmaier will lead Transamerica’s team of central regional vice presidents for all retirement plan sales activities in the small-plan market. He will report to Jason Crane, executive vice president and managing director of retirement plan sales.

“Bill is a valued team player who will support our sales force in offering expert guidance to financial professionals and retirement plan sponsors,” says Crane, who is based in Harrison, New York. “We are delighted to have a proven sales leader of his caliber join the Transamerica team. We are confident that his experience, leadership and ability to establish successful business partnerships will help Transamerica to increase retirement readiness for more U.S. employees.”

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Feldmaier has 14 years in the retirement services industry, and has worked both as a successful wholesaler and in national sales leadership roles. Most recently, he served as national sales director of intermediary sales for CUNA Mutual Retirement Solutions.

Feldmaier will replace Dan Long, who will now serve as regional vice president for midwest institutional retirement plan sales, reporting to Michael Wannell, division vice president for institutional markets in the western region.

Transamerica Retirement Solutions is a provider of customized retirement plan solutions for small to large organizations. More information about the firm is available at http://www.trsretire.com.

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