THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, November 29, 1995 TAG: 9511290418
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 65 lines
A New Jersey company is seeking to profit from 95,000 illegally taxed federal and military retirees who were shortchanged earlier this year because they opted for refunds in up to five annual installments.
Singer Asset Finance Co. is offering to pay these retirees lump-sum payments - for a fee that runs as high as 30 percent of a retiree's outstanding refund.
Singer officials say their offer is a ``fair'' deal based on comparable discount fees for credit cards and consumer loans.
But one retiree leader is worried that pensioners who made the wrong call the first time will act without reading the fine print.
``It's coming on to Christmas, when people need more money,'' said William F. Wollenberg, a retired Army colonel from Petersburg. ``I hate to see people get further taken by this whole process.'' As a member of the Virginia chapter of the Retired Officers Association, he helped negotiate the settlement offer with the General Assembly on behalf of the state's federal retirees.
Many of the 150,000 federal and state pensioners who accepted the state's settlement of 75 cents for each dollar illegally taxed from their pensions might now regret their decision.
The remaining 14,000 pensioners who rejected the state's original deal were rewarded for their patience in September: The Virginia Supreme Court ruled the state must pay them full refunds, plus interest. These relative few received refund checks earlier this month, while others must wait until the end of the century to receive all of their money.
Singer Asset Finance Co. is betting that many of these retirees won't want to wait that long.
In newspaper ads the company plans to run this Sunday, Singer Asset offers immediate cash payments to those willing to pay service fees ranging from 10 percent to 30 percent.
``This is a fair rate compared to other discount rates in the marketplace,'' said Sheila Brody, senior vice president of Singer Asset's parent company, Enhance Financial Services Group Inc.
A public relations briefing paper suggests the company anticipated that the offer could be perceived as trying to take advantage of retirees. The internal ``Media Q&A'' document includes the question: ``With you taking another cut, aren't the (retirees) really taking a double hit and getting cheated out of a lot of what's really due them?''
The document recommends the following response: `` . . . Participation in our offer is voluntary, and our fees are consistent and competitive with current market rates. If this weren't the case, no one would participate.''
Singer Asset has received about 100 inquiries since it test-marketed its newspaper ad in The Roanoke Times last weekend, according to company Vice President Jim Collier.
The company's potential market is about 95,000 federal and military pensioners, all of whom had settlement refunds of more than $1,150. Some 55,000 retirees with smaller claims received full payment when the first installments were mailed in March.
Wollenberg, the retiree leader, said he would advise pensioners to scrutinize the fine print. But he conceded that many people might not think twice before jumping at the deal.
``They are playing to the elderly,'' he said. ``I think a lot of people of advanced age want to be sure they get the money.'' by CNB