Suing the NEA over Retirement Benefit Kickbacks

A couple of major papers are running a story in their education sections today on a lawsuit initiated by two teachers against the National Education Association over the NEA's recommendation of retirement plans.

Here is the gist from the LA Times:

The National Education Assn. faces a federal lawsuit accusing it of
breaching its duty to members by recommending a high-cost retirement
plan in exchange for millions of dollars from the managers of the plan.

The
suit, which seeks class-action status, was filed by two of the 57,000
schoolteachers who the suit says invested $1 billion in a so-called
403(b) retirement plan endorsed by the NEA.

The suit says the teachers were lured to invest in the plan by
assurances that the NEA "conducted an extensive review of numerous
financial services companies to find the best provider." But the NEA's
member benefit unit "received millions of dollars … as the quid pro quo
for NEA's exclusive endorsement," the filing says.

Continue Reading.

Here is a different story on the same issue at The NY Times.

Here is a quick read at The Teacher Advocate blog, written by a financial planner for teachers.

It will be interesting to see what happens with this, but to be sure, it is more negative publicity for teacher's unions and given that we are in an election cycle and all the major Democratic Candidates just got finished addressing (videos)the NEA national convention (where Barack Obama told them we need to move to merit pay), it is certainly the kind of negative attention they don't need.