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Should I take a Military Pension Advance?

Tread very carefully when examining any pension advance company – the price may be very high.

Dear Kim,

I am just about to begin collecting on my military pension. I recently received information from an agency offering me a pension advance. I was not totally clear on what this was. It sounded too good to be true. Could you explain what a pension advance is and if it is ok to take one?

Sam, TN


Dear Sam,

Thank you for your dedicated service to our country. It is an honor to be able to provide you with assistance.

A pension advance is a product in which you receive a lump sum cash payment in exchange for either a portion or your total monthly pension check. The commitment to make these payments typically lasts five to ten years. This product is very much like the controversial payday loan.

A pension advance often comes with a high price tag. Some of these advances can have interest rates as high as 100%. The investor will often require the borrower to take out a life insurance policy making the investor the sole beneficiary to secure payments if the borrower dies. It is imperative that you understand the fine print before signing for an advance. You must be aware of all of the fees associated with the advance and the actual cost of the transaction. I also suggest speaking with a tax professional prior to taking an advance to determine what the tax ramifications might be.  In addition, I would suggest that you investigate the agency thoroughly. Confirm with your pension administrator that the selling of your pension is legal and that the seller is registered with a state or federal regulator.

The Consumer Finance Protection Bureau and numerous state Department of Financial Services have investigated pension advance agencies. As a result of increased scrutiny, many of these agencies work via the internet and have found ways around laws, such as allowing the pensioner to retain control of the pension, while setting up a monthly withdrawal from their bank account.

My advice on this product would be the same as the Consumer Finance Protection Bureau’s; be very careful. I would not in good faith recommend a product in which you may pay potentially high fees for your own money. Also, don’t be fooled by the military sounding names of these companies; the United States Military does not endorse or recommend a pension advance company.

Best of luck!


Kim headshot 3

Kim Cole is the Education Outreach Coordinator for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month’s edition. All identifying information will be kept anonymous.

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