Pension or settlement Income streams

What You need to Know Before Buying or selling Them
Do you receive a monthly pension from a former
employer? Are you getting regular distributions from
a settlement following a personal injury lawsuit? If
so, you may be targeted by salespeople offering you a
lump sum today to buy the rights to some or all of the
payments you would otherwise receive in the future.
retired government employees and retired members
of the military are among those being approached with
such offers. typically the lump sum offered will be
less—sometimes much less—than the total of the
periodic payments you would otherwise receive.
After acquiring the rights to a future income stream
(such as a retiree’s pension payments), these pension
purchasing or structured settlement companies, some-times called “factoring companies,” may turn around
and sell these income streams to retail investors, often
through a financial advisor, broker or insurance agent.
these products go by various names—pension loans,
pension income programs, mirrored pensions, factored
structured settlements or secondary-market annuities.
they may be pitched to investors with words like
“guaranteed” and “safe”—and may tout robust returns
that outpace more traditionally conservative investments
such as CDs or money market accounts. the advertised
returns may sound enticing, but investors should be
aware that these investments can be risky and complex.
FInrA and the seC’s office of Investor education and
Advocacy are issuingthis Investor Alert to inform anyone
considering selling their rights to an incomestream—or
investing in someone else’s income stream—of the risks
involved and to urge investors to proceed with caution.
What Is a Structured Settlement?
A typical structured settlement involves the
resolution of a personal injury or workers
compensation lawsuit, which often takes the
form of “structured” or periodic payments made
to the injured party. the periodic payments are
commonly funded by an annuity issued by an
insurance company, and are often structured to
provide a dependable stream of income and a
degree of financial security to the injured party.
Selling Your Pension or Structured
Settlement Income Stream
In a typical transaction, the recipient of a pension or
structured settlement will sign over the rights to some
or all of his or her monthly payments to a factoring
company in return for a lump-sum amount. And the
lump-sum amount that factoring companies offer will
almost always be significantly lower than the present