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Most pensions are not "technically" owned by the recipient, but by the organization(s) providing the pension. Accordingly, one has few options for borrowing money against the pension. Also, until one is fully vested in (i.e., owns) that set of pension benefits, that individual would not be able to access any of the benefits provided. So, for the most part, no, one cannot borrow against their pension.

However, if the following conditions are met, then there is a possibility of borrowing against the pension:

(1) The organization allows the individual to use the pension as collateral for a loan

(2) The individual is vested in some part of the benefit and only wants to borrow against that part of the benefit that they are vested in

(3) The vested benefits are guaranteed by the organization

Given the above three conditions, a person may be able to get a loan against that pension from a reputable financial institution.

An alternative to a loan, a lump sum payment, is available if the individual is already collecting payments/benefits from the pension. In this case, either the organization or a reputable financial institution will make a "trade" of a lump sum for the rest of your payments.

In whichever case you choose, when using a financial institution, expect to pay a 1% to 3% fee of the total present value of your pension benefits to complete the transaction.

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Q: Can you borrow money against your pension?
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