Teachers Union Ripping off Teachers
If this was from an organization that consistently contributed to Republicans this story would be in every major news paper and on all the major networks… CNN has nothing on it, nor does ABC, NBC, or CBS…
The New York Post however does have the story.
October 24, 2007— OSTENSIBLY, union leaders have one purpose – to protect and advance the interests of their members, push ing for higher wages, better health and pension benefits, etc. But the nation’s top teachers union is doing just the opposite – exploiting its members by recommending sub-par retirement plans, for the union’s own profit.
New Yorkers may recall how then-Attorney General Eliot Spitzer last year sued the benefits arm of the state teachers union for accepting nearly $3 million a year from an investment firm in exchange for exclusively endorsing a high-cost retirement plan. Teachers, according to Spitzer’s suit, “believed that the union was vouching for the quality” of the plan.
The state union eventually settled for $100,000 and agreed to ensure that its members were made aware of any compensated endorsements – a news item that could not have escaped the attention of the National Education Association (NEA), which represents more than 3 million teachers (including those in New York). Yet the NEA continues to be involved in the same sort of scheme.
Rather than steering members toward the best retirement plans, the NEA’s leadership is quietly accepting payments to endorse a low-return, high-fee plan that eats away at the savings of the nation’s public schoolteachers.
Not including management fees, the NEA’s only officially endorsed “retirement program” – the Security Benefit Life Insurance Corporation’s Valuebuilder annuity – charges 0.9 percent to 2.6 percent a year. Throw in management fees, and the least expensive option costs a teacher 1.73 percent of her account balances each year, while the most expensive costs 4.85 percent.
Over time, a fee that large is devastating. Without inflation, the educator would have to earn nearly 5 percent each year simply not to lose money. Consider a teacher who socks away $500 a month and earns an average yearly return of 10 percent for 35 years: She’d wind up with $1,788,760 upon retirement – quite a sizeable nest egg. But if she were paying 4.85 percent in fees, she’d accumulate less than one-third as much – just $587,854.
It appears that the NEA is willing to endorse a shoddy plan in exchange for a contribution to its coffers. In 2004, the union collected nearly $50 million from the investment vehicles it endorsed.
Union leaders today, and I am not talking about local union representatives, but rather the leaders of Nationally Organized Unions, are no better than the Fat Cat Industrialist Monopolies of the early 20th Century. The interest of today’s unions and union leaders is more in the line of increasing their influence and padding their bottom line than it is in protecting its members.