Whose Union Is It?

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A recent article in Forbes magazine exposes some shady deals made by local teachers' unions, who appear to have anything but the interests of their membership at heart. It turns out that unions, in return for a nice big chunk of change, commonly endorse mutual funds for their teachers, even though they carry excessive, above-market annual fees. Some of the biggest names in insurance are involved, including AIG, ING, and MetLife. New York State United Teachers reportedly receives $3 million a year in exchange for its exclusive endorsement of ING's retirement plans. The article provides an account of how one insurer, Great West, in spite of offering a bargain-priced mutual fund for teachers, was turned away by the NEA after it refused to pay for an NEA endorsement. Instead, the NEA stuck with their exclusive endorsement of Security Benefit's "NEA Valuebuilder" product, which charges teachers over 5 percent in annual fees - compared to Great West's rate of 0.15%.