Pension Funding: Brand New Money For Pensioners

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If you are receiving a pension, there is a now a program that will allow you to get an advance on those pension payments. Its called pension funding, and it does not matter whether you are receiving a civil service (federal, state and local government), military, police, fire, EMS, teachers or corporate pension, you can get an advance when you need one.

Pension funding, what is it all about? Pension funding allows pensioners to borrow money from their pension without taking a loan.  It provides an up-front lump sum of cash to pensioners in exchange for receiving a number of the pensioner's future pension payments.  

Pension funding is gaining in popularity as the number of Baby Boomers reaching retirement age grows. Unfortunately, an alarming number will retire with little-to-no assets to their name.  For those seeking to borrow money from traditional financing sources, this can be an impossible situation as they simply will not have the required collateral. The only asset many will have will be their pension.  Lending institutions will normally not count these as steady income. 

In this situation, many find it necessary to return to work.  However, for a great number of those pensioners, age, disability, lack of suitable employment opportunities, etc., makes this situation next to impossible.  Sad fact: many pensioners find that their golden earning years are behind them...and they find themselves left with very few options. Enter, pension funding.

How does pension funding work?  It's really simple:  pension funding companies buy a number of years of pension payments for a lump sum paid to the pensioner today.  The company then collects its payments from future pension payments. The money the pensioner receives from the pension funding company is not a loan. It is an advance against future pension payments. The minimum monthly benefit amount that many companies will accept as repayment is $400.

The pension funding process: 1. the pensioner applies for a pension advance; 2. the underwriting department requests a credit report; 3. the funding company sets up an automated advance repayment system; 4. once approved, the pension company will require that it be added to an existing policy; 5. after approval, the lump sum will be directly deposited into the account of the pensioner's choice.

Who is pension funding right for? Pension funding is a retirement planning option. As such, only those who are receiving a pension are eligible.  Secondly, it is likely suitable for only for those in a particularly dire financial circumstance.  Therefore, it is highly recommended that anyone seriously contemplating pension funding first seek qualified, independent financial advice prior to engaging any pension funding company. 

Pension funding can be used for debt consolidation, a down payment for a home,  investments, pay education expenses (tuition), satisfy a divorce settlement, start or expand a business, purchase a vehicle, pay medical bills, or for any legitimate use.

Most type pensions are acceptable for pension funding: civil service (federal, state and local Government); post office; police, fire, EMS, teachers, military, professional athletes, and corporate (public and private).

Pension funding has a number of advantages: get a lump sum of cash in as little as 2-4 weeks; its not a loan, rather, an advance to be paid back through future pension payments; perfect credit is not necessary; and, depending upon the pensioner's tax status, pension advances may not be taxable (NOTE: consult with your financial counselor.)

With all of its advantages, pension funding also has some distinct disadvantages: pension funding is expensive and should be used only if traditional funding is not available; an advance decreases future pension payments; though perfect credit is not needed, a pensioner must have reasonably good credit; pension advance require large amounts of documentation and complex legal issues; some pension funding companies exchange eight years of pension payments for a large up-front lump sum; and most pension funding companies require that they be add as a beneficiary to an existing insurance policy.

Special Note for Military Pensioners: there are pension funding companies which do make advances on military retirement.  Any person wanting an advance on their military retirement must, in fact, be retired from the military and currently receiving a military retirement check.  (Some companies require the military retiree to have been retired and drawing a pension for six (6) months before they will consider providing an advance.) It is important to note that pension funding companies are the only financial outlets that provide advances on military retirement pay.

You now have the knowledge to help those pensioners around you.  Spread the word. Inform all pensioners and everyone you know about the power and possibilities of pension funding.

 

Mike Evans is a cash flow authority. Contact him at mike@learnaboutcashflow.com.  Also, visit the fastest growing cash flow authority website at http://www.learn-about-cash-flow.com/pensionfunding.html for more pension funding and cash flow information.

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