Posted by Flatnose
Often young teachers, having heard of unscrupulous and sadistic administrators inside our public school systems, think the solution is to join the National Education Association teacher union.
Later, they’re surprised to learn — usually through traumatic first-person experience — that NEA local officials often have no intention of fulfilling any of what were cynical promises. Instead, it soon becomes clear, as it has repeatedly here in Southern Nevada, that the union officials are actually allies of the administrators and, like them, just want teachers to shut up and obey. Actually representing teachers, after all, would cost the union time, energy and money, and could tick off the very administrator whose approval you need to get on the school district's fat-job gravy train down the road. Much easier to just unethically pressure teachers to get back in their boxes and be quiet.
The reality of the union, however, turns out to be even worse. As a Bloomberg News investigative report has shown, the union actually preys upon unwary and trusting teachers, with its ‘Valuebuilder’ retirement scam. The union gets kickbacks for helping in the destruction of teacher retirement nest eggs.
Bloomberg’s initial report was released in January and then re-released on Bloomberg Television last night, following new developments in the class-action lawsuit West Coast teachers filed against the NEA.
The program — on retirement scams — was narrated by Bloomberg news anchor Mike Schneider. Here’s a transcript of the long portion of the program that focused on the NEA scheme:
Siedle: "There are some 401Ks that I call lethal, ‘cause they will kill you. They will absolutely kill your retirement nest egg."
“Not far from Jerry Schneider’s house, in another small town on Puget Sound, School Psychologist Jeri Daniels-Hall has kept money in a plan called Valuebuilder, offered by her union, the National Education Association. Jerre has a 403B, which operates like a 401K, but applies to public school employees like Jerre, as well as workers in government, universities and non-profits.
“When Jerre opened her 2007 year-end statement, she got a shock:
Jerre: "I have less money now than I had maybe four months ago, earlier in the year. So it’s not doing very well."
“Daniels-Hall and her attorney say she’s got less money in her account, in part because of hidden fees.
Derek Loeser: "Lawyers talk about the slippery slope. This case is the pile-up at the bottom of the slope."
“Derek Loeser is a partner in the Seattle-based firm, Keller Rohrback. He represents Jerre and another union member in a class-action lawsuit that accused the NEA of “conflicting interests,” resulting in fees that could be characterized as ‘truly absurd.’ Loeser and his partners say they have never seen fees as high as NEA’s worst case: 12.17 percent.
Loeser: "A fee load of that degree would make it impossible for anyone to generate any additional savings out of this plan. Some people may well end up with less money in the plan than they originally put in."
“In a statement to Bloomberg News, NEA General Counsel Lisa Sotir wrote: 'It’s hard to deliver a program like this with a low fee … because there are commissions paid to agents.'
“Hearing that doesn’t make Jerre feel better. She says she feels betrayed.
Jerre: "It makes me sick. It’s scary."
“When we come back, what Jerre Daniels-Hall and other investors have learned the hard way about what many consider the single most common hidden fee in employer-based retirement plans. You could be paying it, too.
[commercials]
“Jerre Daniels-Hall may have never learned about the fees that were eating into her retirement account had it not been for the loss of someone she wouldn’t trade all the money in the world for: Her husband, Dick Hall.
[Video of man on beach with two children]
“This was Dick in 1995, the year his doctors discovered his cancer.
Jerre: "He had just had his 50th birthday in July, and he was dead in six weeks. My son was nine, and my little girl was five. We all cried."
“Jerre started an investment portfolio, with the money she received from Dick’s life insurance policy. Ten years later, she realized that the returns from her $13-thousand NEA account were much lower than her other portfolio. That’s when it hit her: Dick was a school psychologist like Jerre. Had he survived, they would both be in a tight spot right now.
Jerre: "We would still be contributing to the NEA ValueBuilder. [Shaking head.] At the end, we wouldn’t have had enough money to retire."
“Now, Jerre was worried. When she asked her local union officials to disclose the fees for the NEA’s 403B plan with more than a billion dollars in assets, Jerre says they stonewalled. That’s when she sued.
“Her class-action lawsuit drew attention to one of the more controversial fees in retirement plans today, called ‘revenue sharing.’
“There are now almost 9,000 mutual funds in existence, but often fewer than 20 in a 401K plan, making the cut cost money.
“Dr. Greg Kasten, Unified Trust Company, serves as the advisor for more than $2 billion in retirement assets. He says, to be in your plan, most funds pay a fee, which he believes is a legitimate cost as long as it’s disclosed and used to pay for necessary services.
Kasten: "The mutual fund is making a payment — sort of a ‘pay to play’ type of arrangement …. The mutual fund has to make a payment to the insurance company or the insurance company won’t recommend the mutual fund."
“In Jerre’s case, here’s how that works. Jerre participates in a retirement plan offered by her union, the NEA. Through the plan, she invests in funds. To be one of the funds offered to Jerre, the funds pay the insurance company that run the plan, Nationwide and Security Benefit, a ‘revenue sharing fee.’ Jerre’s attorneys say the insurance companies then pay the NEA fees in order to endorse the ‘Valuebuilder’ plan.
And you know who pays all those fees? Her attorneys say Jerre does.
Jerre: "Honestly, I didn’t realize there were fees at all that anybody was taking out of my little chunk of money. I had no idea."
Loeser: "The individuals who have contacted us, the clients that we have, were outraged to learn that this plan was not brought to them by their union because of its merits, but was brought to them because of kickback payments that the union received. That was simply, in their minds, an outrageous breach of trust."
“In May of 2008, a judge in the western district of Washington dealt Jerre another blow: He dismissed the case, ruling that the NEA plan is not covered by the same laws protecting pensions and 401Ks. ‘No authority squarely addresses this issue,’ he wrote. Jerre’s attorneys and co-plaintiff David Hamblen are now reviewing their options, including an appeal."
Financialweek.com has a version of the original Bloomberg print story, at http://www.financialweek.com/apps/pbcs.dll/article?AID=/439036/-1/NEWS01
