Tuesday, July 17, 2007
Law Suit Charges Teachers Professional Association Breached Duty to Members in Recommending Annuities
Gretchen Morgenson reports that the National Education Association, the teachers' professional association, is being sued in Washington State Court, charged with breaching its duty to its members by recommending high-cost annuities in exchange for millions of dollars from two financial firms, National Life Insurance Co. and Security Benefit Group. Annuities are sold to retirees on the basis of their guaranteed income, and the investors frequently do not understand that their high expenses diminish their return. The plaintiffs charge that because of their recommendations the NEA became a retirement plan sponsor under ERISA and thus owed their members a fiduciary duty. See NYTimes, Lawsuit Says Teachers Are Overcharged on Annuities.