By Suzanne Barlyn

Thu May 9, 2013 4:17pm EDT

n">(Reuters) - The top securities regulators on Thursday warned individual investors about pension purchasing companies that persuade retirees and military veterans to sign over pension checks in return for lump-sum payments, as regulatory concerns about the practice mount.

Individuals who receive monthly pension payments could be targets of salespeople offering an immediate lump sum in exchange for some or all of their future pension payments, the U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority wrote in a joint alert.

Pension recipients who sign over their payments to so-called "factoring" or "pension advance" companies, will almost always receive lump-sum payments that are lower than the present value of their future income streams, the SEC and FINRA wrote. The companies also target individuals who are receiving payments for settlements of personal injury lawsuits, according to the regulators.

The investor alert follows a probe opened by New York's main banking regulator into pension advance companies. The state's Department of Financial Services, at the direction of New York Governor Andrew Cuomo, has subpoenaed 10 companies involved in the business, the governor said on Tuesday.

Cuomo accused the companies of "preying" on retirees and veterans by advancing sums that may actually be disguised, high-cost loans.

Individuals who are thinking about selling the rights to their pensions should consider the value of the lump-sum payment compared to the future income stream - a figure that most states require pension advance companies to disclose, the regulators wrote.

The deals also involve transaction costs, which can include everything from brokerage commissions to notary fees, according to the joint SEC-FINRA alert.

The SEC and FINRA also warned investors about buying the rights of someone else's pension or personal injury settlement.

Companies pushing such investments are advertising yields from 5.75 percent to 7.75 percent, the regulators said. That may be appealing in the current low interest-rate environment, but the securities can be expensive and difficult to sell, according to the alert.

(Reporting by Suzanne Barlyn; Additional reporting by Jonathan Stempel; Editing by Linda Stern and Chris Reese)

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