(AP Photo/Matt Slocum)

An investigation by the Government Accountability Office has found that a federal pension program aimed at low-income veterans isn’t living up to its promises, and is also particularly easy to abuse.

According to the New York Times, the veterans’ program is so full of loopholes that an entire industry has popped up across the country to help moderately well-off veteran retirees hide their assets so they can qualify for more federal funding.

The GAO report concedes that the practice is not actually illegal, but notes that it goes against the spirit of the retirement benefits program. It also notes that many veterans who attempt to access the benefits, for good or bad, have been stung with especially high charges for inappropriate products.

The Times suggests that more than 200 companies have appeared across the U.S., offering veterans the ability to restructure their debts to appear indigent and, as a result, qualify for more than $20,000 a year in tax-free pension benefits.

At the same time, predatory financial advisors have been noted to charge retirees $10,000 to put the earnings into inaccessible trusts or deferred annuities with no benefits during the retiree’s life.

The report says blame lies squarely with the Department of Veterans Affairs, where fishy eligibility, incomplete recordkeeping and only partial declarations of wealth and financial holdings are routine among applicants.

Current qualifications for the pensions require the recipient to be over 65 or permanently disabled and to also fall below an income threshold beginning at $12,200. In 2011, the system paid $4.3 billion to more than a half-million veterans or their survivors. The disabled can also receive aid and attendance benefits for extended care.

“If things continue as they are, and people see this program as a magnet for rip-off and waste, I believe that in this financial climate, support for the program will fall apart,” Oregon Senator Ron Wyden told the Times.

Wyden, a member of the Senate Special Committee on Aging, said the bipartisan committee will examine the apparent problems in the program.

The GAO report outlines several horror stories relating to the abuses seen in the system and among advisors who have opted to exploit the veterans’ program’s benefits.

Undercover researchers from the GAO posed as the children of a veteran and said they were told repeatedly by 19 different firms that they could easily qualify, even with substantial holdings, provided they put their money into expensive trusts or complex annuity products. Many companies contacted also charged exorbitant fees for basic services.

Read the full story here.