Teachers file suit against NEA over annuities

A lawsuit filed last week in federal court in Washington State contends that the National Education Associationbreached its duty to members by accepting millions of dollars inpayments from two financial firms whose high-cost investments itrecommended to members in an association-sponsored retirement plan.  The case was filed on behalf of two N.E.A. members who had invested inannuities sold by Nationwide Life Insurance Company and the SecurityBenefit Group. It contends that by actively endorsing these products,which carry high fees, the N.E.A., through its N.E.A. Member Benefitssubsidiary, took on the role of a retirement plan sponsor, which mustput its members’ interests ahead of its own.  By taking feesfrom the two companies whose annuities N.E.A. Member Benefitsrecommended to its members, the N.E.A. breached its duty to them, thesuit contends. The N.E.A. is the nation’s largest professionalorganization; its Web site says it serves 3.2 million workers ineducation, from preschool to university graduate programs.  Thesuit reflects heightened concern among retirement plan participantsthat excessive fees are diminishing their savings and enrichingfinancial services firms. Last November, the General AccountabilityOffice published a study concluding that retirement plan participants,as well as the Labor Department, needed clearer information on fees inthese investment vehicles.

Source:  New York Times, http://www.nytimes.com/2007/07/17/business/17suit.html