Buying Trouble With Secondary Pensions
Frequent readers of Annuity Straight Talk updates will know that we are big fans of the secondary market for annuities. Well there’s another secondary market with high yields and assumed levels of safety but things aren’t always as they appear. I’m talking about secondary pensions, which come with a whole different set of rules and guidelines. In fact, it seems as though by participating in this market you’ll be buying nothing but trouble. Forbes published an article recently with a few horror stories. Read the article here.
Since we promote secondary annuities, it’s our duty to clarify things when something similar is peddled to unsuspecting investors. The transfer of structured settlements, or secondary annuities, is governed by federal statute, USC 5891. Court assignments are irrevocable and the transfer process has been refined to the point that it represents extreme levels of safety for consumers.
Secondary pensions, on the other hand, have laws that explicitly restrict and prohibit transfer. So when you purchase one of these, not only is there no court order, but it’s very hard to make the private-party contracts stick as well. The original seller can simply decide to stop sending payments. The article does a good job of outlining the imminent legal issues and points to certain advisors who are misleading clients into thinking these contracts are legally binding. They are not and should be avoided at all costs.
If you’ve considered participating in the secondary market for annuities, knowledge of similar options is of paramount importance. Don’t believe anyone who tries to steer you toward a secondary pension. Let me be clear: the sale of pensions in a secondary market is strictly forbidden by law and I’d like to ensure that none of our readers makes a mistake with precious retirement assets.
Please contact us with any questions or comments. For more detailed assistance we are available by phone or email.
Thanks for your continued loyalty!
Bryan J. Anderson