Washington, D.C.– Coinciding with the release of a Government Accountability Office (GAO) report investigating “pension poaching” practices by unscrupulous financial planners operating within the VA’s pension program, U.S. Senators Ron Wyden (D-Ore.) and Senate Aging Committee Chairman Herb Kohl (D-Wisc.) held a hearing to discuss the program that has become a marketing tool to sell inappropriate financial instruments to elderly veterans.
The Enhanced Pension with Aid and Attendence (or A&A) is a supplemental pension benefit designed to provide most-needy veterans with funds to fulfill their everyday needs. Unfortunately, problems with the design and administration of the VA pension program have led to a growing industry of predatory financial planners and attorneys who are using A&A to target vulnerable seniors and sell them inappropriate financial tools.
“It is clear that a program created to help the neediest among us has become a magnet for rip off artists preying on unsuspecting seniors,”Wyden said. “In the current budgetary climate, having a program so rife with loopholes that allow for financial planners to game the system on behalf of seniors will undermine support for what should be an important lifeline. With the help of the VA and Chairman Kohl, it is my hope that this program can be reformed and returned to its original goal of helping those who need it most.”
“Many veterans and their families are being hurt because their assets are being tied up, they’re forced to pay exorbitant fees if they need to access their money and they may no longer qualify for Medicaid benefits,”said Chairman Herb Kohl, D-Wis. “The increased filing of questionable claims has also increased the backlog of pending VA pensions, slowing the process for veterans who truly need assistance. And, it also comes at a great cost to taxpayers, who pay for these needs-based pensions that go to individuals who are not actually in need.”
For veterans to be eligible for the aid and attendance pension, they must show that they are financially in need of the support. However, loopholes in the program allow for creative financial accounting to make seniors appear less wealthy than they are. An entire industry of financial planners and attorneys has sprung up in recent years aimed at selling seniors financial instruments that help them appear to be less wealthy, but can also tie up their finances for months or years without even guaranteeing that the seniors will eventually qualify for aid and attendance. The financial maneuvering can often affect a senior’s ability to qualify for Medicaid benefits and other government assistance programs.
The financial professionals then extract fees for selling seniors financial tools like annuities and trusts that seniors cannot touch for years without paying a huge penalty and promise to help them apply for the A&A benefit. Numerous government and non-government organizations offer free assistance applying for the benefit. The GAO conducted an undercover investigation into these practices and released a report today outlining these practices.