Newspaper Article

RETIREMENT AT RISK: TEACHERS' UNIONS OFTEN TARGETED FOR BAD BROKERAGE ADVICE Series: Retirement at Risk Threats to your savings plans

Kathy M. Kristof Los Angeles Times

2006

Overview

Teachers unions across the country -- including statewide teacher associations in Pennsylvania, Michigan and Oregon -- have struck their own endorsement deals. Unions in Dallas, Miami, Phoenix, Seattle and Atlanta, among others, refer members to products approved by the NEA and typically receive a share of endorsement revenue in return. Many teachers say they presume an endorsement means their union has used its clout to get the best price, as unions do on products varying from eyeglasses to automobiles. But when it comes to retirement accounts, union backing is often a sign that the product will cost more. \"This is a national problem,\" said Dan Otter, a former Maryland teacher and founder of 403bwise.com, a Web site that offers tips on finding low-cost 403(b) plans. \"It's a rare school district that gives teachers access to quality choices,\" Otter said. \"And it's the rare union that's advocating for better 403(b) investments for its members. In many cases, the 403(b) is a source of profit for unions.\" The broker who showed up at [Crystal Mendez]'s school two years ago was from Zahorik Investments of Pasadena, another preferred provider. Two years later, she discovered that her money was in a fixed-rate ING annuity. To take her money out, she would have to forfeit 10 percent of her savings -- $1,000. She did so, reluctantly. \"I could have stayed in for the 10 years and not paid the surrender fee,\" she said. \"But we figured it would cost me more than that in lost investment returns if I did.\"

• Publisher: Tribune Interactive, LLC