After declaring last week that "there's a special place in you-know-where" reserved for financial firms that take advantage of military veterans, U.S. Senator Claire McCaskill is targeting some of those companies that have been caught red-handed doing just that in recently unveiled legislation aimed at stopping the practice of "pension poaching."
McCaskill told a Senate panel last week that legislation is needed to address the practice in which financial institutions use loopholes to abuse pension programs that provide benefits to military veterans. More than 200 financial service organizations across the country have begun marketing estate planning services to veterans in order to help them qualify for additional VA benefits--services which often involve the "restructuring" of the veteran's assets in order for them to appear indigent. The firms then charge veterans exorbitant fees or, because of the nature of the financial planning work by the firm, permanently prevent veterans from accessing their assets, which are often later needed by the veterans to support themselves and their families.
McCaskill has joined Sen. Ron Wyden and several Republican colleagues in introducing legislation to prevent the practice.
"Financial companies trying to get rich off of the backs of our veterans should have to turn in their business suits for orange jump suits," said McCaskill, a former prosecutor and daughter of a World War II veteran. "This legislation is a good first step, and I look forward to keeping the spotlight trained on these sleazy practices to ensure that our hard-earned wins for veterans over the past few years aren't eroded."
The practice of pension poaching, while not technically illegal, sparked a year-long investigation by the Government Accountability Office (GAO) after repeated complaints by veterans and their families. The ensuing GAO report identified a number of issues exacerbating the pension poaching problem, including the complexity of application processes, a lack of clear guidance for determining eligibility, and an inability by administrators to look at financial histories.
This legislation would create a three-year "look-back" period for the purposes of determining if financial firms had disposed of resources at below-market-value in order to qualify for additional VA benefits. This would include moving assets into annuities, trusts, or other financial instruments, which are common practices for firms engaged in pension poaching, leaving veterans with little or no access to their hard-earned savings.
"Pension poachers better look out, because Senator McCaskill is going to be coming after "em," Wyden said at last week's hearing. "If anybody can figure out how to make sure that we take the toughest, most aggressive approach to these pensions poachers, it's the Senator from Missouri."