Pension Poaching

“Pension poaching” is a financial scam targeting veterans, perpetrated by shady advisers who promise to help former service members grow their retirement funds or obtain extra benefits from the Department of Veterans Affairs (VA).

The schemes often involve financial maneuvers that can backfire and actually disqualify veterans from needed benefits, or tie up their savings in investments that earn lucrative fees for the advisers. According to AARP's November 2021 Scambush report on frauds against veterans, nearly half of former and active-duty service members approached by pension poachers erroneously signed over VA benefits.

A common form of the scam starts with an unscrupulous lawyer, financial planner or insurance agent cold-calling veterans, sending mail solicitations, or showing up at a senior center or assisted living facility, offering to help ex-military members apply for a VA program called Aid and Attendance (A&A). This is a legitimate program that boosts pension benefits to help older veterans pay for long-term care if they are bedridden, live in a nursing home, or need help with daily living activities such as bathing, eating or using the toilet.

Only veterans with limited earnings and assets are eligible for A&A. Pension poachers try to convince you that it’s possible to get around the rules by restructuring your finances so you appear to be needy enough to qualify.

For instance, they might recommend setting up a trust to transfer your retirement assets to family members. But that could get you disqualified by the VA, which scrutinizes any assets you’ve shifted in the three years before you file an A&A claim. Even if you manage to secure A&A, you might disqualify yourself from Medicaid, which has a five-year “look back period” for changes in assets. Medicaid can cover long-term care, and losing access to it could be a blow if the extra pension money from the VA isn’t enough to pay for the help you need.

Or a sham adviser might urge you to use retirement savings to buy an annuity. But these insurance products aren’t right for everyone, the Federal Trade Commission (FTC) warns: While annuities make regular payments over time, they can lock up the bulk of your cash for years. If a major need arises, you often can’t tap that money without paying a hefty penalty for early withdrawal.

Pension poachers tend to leave information like that out when they’re selling you on how much they can make your money grow — and collecting hundreds or thousands of dollars in fees for their supposed services.