Bill bars liens on retiree benefits

It prevents firms from advancing loans on teacher system

An Arkansas legislative committee on Monday endorsed a bill aimed at protecting retirees in the Arkansas Teacher Retirement System from predatory practices by barring pension advance companies from obtaining benefits to repay a loan.




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The Joint Committee on Public Retirement and Social Security Programs advanced Senate Bill 233 by Sen. Ron Caldwell, R-Wynne.

"Basically, what this does is to prohibit the company from advancing money to a retiree and then taking a lien on that account and basically overcharging," Caldwell said.

"One of the real-life case scenarios is a retiree was advanced $1,900 and the company charged him a $300 fee and basically distributed $1,600 to the person. Over 60 months, they were charged $242 per month [in retirement benefits] and the debt payment [was] $14,520 to receive $1,600," he said.

George Hopkins, executive director of the Arkansas Teacher Retirement System, told lawmakers this case involved an out-of-state company, whose name he didn't have with him. He declined to disclose the retired member's identity.

"The likelihood of this happening seems to be increasing [and it] tends to be out-of-state companies that are providing these kinds of actions and then sending us information saying [to] direct these proceeds to their companies," he said.

Afterward, Hopkins said the system isn't processing requests from pension advance companies to send them a member's retirement benefits.

But "that does not stop the assignment. It just is not made from ATRS to the pension advance company. The member can sign bank documents to allow the funds to be forwarded once ATRS pays the member," he said.

SB233 would bar "a pension assignee" from using "any device, transfer, or other related scheme to circumvent the prohibition against the assignment or transfer of a plan benefit."

Such a device, transfer or related scheme would include the deposit of a retirement benefit into a joint account held by a retirement benefit recipient and a pension assignee, as well as a pension assignee's authorization under a power of attorney or "other instrument" to access or obtain funds from an account to which system retirement benefits are deposited.

Afterward, Hopkins said the bill is modeled after a law in Missouri.

The Arkansas Teacher Retirement System is state government's largest retirement system with more than $15 billion in investments.

The system included 43,095 retired members with retirement benefits totaling $984 million -- an average of $22,833 a year -- and 3,864 deferred retirement plan participants with a total payroll of $239 million -- an average salary of $61,853 a year -- on June 30, according to system actuary Gabriel, Roeder, Smith & Co.

The system also had 68,368 working members with an average age of 44.4 years, average service of 10.3 years and average salary of $37,235 a year on June 30.

A Section on 02/14/2017

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