Lawsuit Says Teachers Are Overcharged on Annuities

I have zero doubt that this lawsuit accusing the NEA of screwing its own members to line its pockets is correct, as it mirrors a similar scandal in NY State, which the union settled.  More broadly, it's a great example of the saying: power corrupts and absolute power corrupts absolutely.  The teacher unions have become so rich, powerful and unchallenged that they're becoming arrogant and corrupt, at least on occasion, leading to behavior like this and thuggish attacks against opponents (just ask Eva Moskowitz and Cory Booker -- the "Stop the Killing" billboards in Newark are still up -- I saw one earlier this week).  It reminds me of the Teamsters decades ago -- which is actually good news for reformers because such organizations make mistakes, overplay their hands and lose the support of the public and politicians (but it can take decades...).

A lawsuit filed last week in federal court in Washington State  contends that the National Education Association <http://topics.nytimes.com/top/reference/timestopics/organizations/n/national_education_association/index.html?inline=nyt-org> breached its  duty to members by accepting millions of dollars in payments from two  financial firms whose high-cost investments it recommended to members in an  association-sponsored retirement plan.


The case was filed on behalf of two N.E.A. members who had  invested in annuities sold by Nationwide Life Insurance Company and the  Security Benefit Group. It contends that by actively endorsing these products,  which carry high fees, the N.E.A., through its N.E.A. Member Benefits  subsidiary, took on the role of a retirement plan sponsor, which must put its  members’ interests ahead of its own.

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July 17, 2007
Lawsuit Says Teachers Are Overcharged on Annuities
By GRETCHEN MORGENSON

www.nytimes.com/2007/07/17/business/17suit.html <http://www.nytimes.com/2007/07/17/business/17suit.html>

A lawsuit filed last week in federal court in Washington State contends that the National Education Association <http://topics.nytimes.com/top/reference/timestopics/organizations/n/national_education_association/index.html?inline=nyt-org>  breached its duty to members by accepting millions of dollars in payments from two financial firms whose high-cost investments it recommended to members in an association-sponsored retirement plan.