Hold on, not so fast
A number of consumer protection agencies, however, including the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB) and the Financial Industry Regulatory Authority (FINRA) recently issued warnings about the downsides of pension advances.
"There are serious financial consequences down the road for taking the money in a lump sum now," said Gerri Walsh, FINRA's senior vice president of investor education. "You are getting less money than if you waited and got those monthly pension payments."
Unlike a traditional loan, you cannot get out of the deal early. If you signed up for a six-year payout, the company gets your pension for a full six years.
"A pension advance is unlike any other type of financing, because you're required to sign over part of your future income stream," said Leah Frazier, an attorney for the FTC. "You could find yourself in a situation down the road where you need money for your basic expenses, but you don't have it because you took it as an advance."
It's also important to remember that receiving a lump sum pension payment is likely to have some serious tax implications.
"It could push you into a higher tax bracket," said Lisa Greene-Lewis, lead CPA at TurboTax. "I could see people doing this and getting shocked by the additional taxes they now have to pay."