Pension Poaching Presents Potential Problem for Veterans

May has been dubbed National Military Appreciation Month - a declaration that encourages everyone to honor current and former members of the U.S. Armed Forces. Though most people use this as a time to support military members and their families, some look at it as a way to make money off of a niche network of people.

BBB warns of a possible uptick in "pension poaching" cons, a financial scam carried out by unethical advisers claiming to provide minimal cost monetary planning services to older military veterans. They set up workshops in senior care facilities or mail out solicitations offering financial planning services for free. Then, they typically gain access to veterans' financial accounts by promising to provide them with Aid and Attendance benefits for a minimal service cost; these benefits supposedly lead to huge returns. What often happens instead is the so-called adviser will restructure the victims' assets in a potentially catastrophic arrangement that could disqualify them from Medicaid.

Aid and Attendance benefits are paid by the U.S. Department of Veterans Affairs to wartime veterans or their spouses who meet certain income and asset requirements and who need daily medical assistance. The requirements to qualify for these benefits are quite complex, and not all veterans in senior facilities would be eligible to apply.  

Because of the strict guidelines around Aid and Attendance benefits, what these unprincipled advisers are actually doing is transferring a veteran's pension benefits to an annuity, irrevocable trust or similar financial tool in order to make them look as if they qualify. As soon as the transfer is complete, the pensioner is either a good candidate for Aid and Attendance or they're out a service fee and possibly disqualified from Medicaid services.

In an ideal scenario, the financial adviser would be a trusted source who is well-versed in how Medicaid works in the state where the veteran resides and can make sound recommendations in order to keep the client from financial catastrophe. Additionally, they would know that there is no fee associated with filing an Aid and Attendance benefit application. However, if the broker or agent attempts to pressure the veteran into purchasing financial products for an additional fee, it's likely that they're not acting in the person's best interest.  

Before signing up for any type of financial seminar or taking advantage of a meeting to discuss personal finances, double check the advisor’s credentials by visiting finra.org. If someone is unethically trying to sell a product by overpromising eligibility for Aid and Attendance, file a complaint with the State Attorney General’s Office or with the Federal Trade Commission. More information about pension poaching is available by visiting https://www.nolo.com/ and report any suspicious activity to BBB’s scamtracker.org.