Jul 20, 2007

class action lawsuit against alleged NEA retirement kickbacks

This is going to be very, very interesting.
The lawsuit, filed in U.S. District Court in Tacoma last week, seeks class-action status on behalf of at least 57,000 other teachers and school personnel who invested with the Valuebuilder plan offered by Security Benefit Life Insurance Co., of Topeka, Kan., and Nationwide Life Insurance Co., of Columbus, Ohio. In all, the union's members invested more than $1 billion since 1991, according to the complaint.

The fees and expenses charged by Nationwide and Security Benefit as part of the so-called 403(b) plan were far higher than those charged by comparable and better-performing plans available on the market, but the NEA and its for-profit subsidiary, the NEA Member Benefits Corp., accepted payments from the companies to endorse those retirement plans, the lawsuit said. The payments created a conflict of interest and cost NEA members tens of millions of dollars in lost retirement savings, in violation of the Employee Retirement Income Security Act, it said.

Furthermore, in Valuebuilder's menu of investment offerings, Security Benefit and Nationwide only included funds that had paid to be listed, the lawsuit claimed.

Union leaders "should be endorsing plans because they're good plans, not because they're paid money to endorse those plans," one of the plaintiffs' attorneys, Derek W. Loeser of Seattle, said Tuesday.
I've looked over many of the discounts on the NEA Member Benefits website. Some are good, others the same as deals you can get elsewhere. I've always thought it was up to me, though, to figure out the costs and benefits, not just to blindly trust that an educator's discount was the best possible deal.

Update: Welcome to visitors from Education in Texas, via the Carnival of Education. Washington Teachers is a fledgling group effort by--you guessed it--teachers in Washington State. Thanks for stopping by.

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