Credit: Ilana Panich-Linsman for The New York Times
For years we have been fighting to protect public employee pensions from attempts by elected public officials to raid them or failing to pay what they owe.
The issue was famously clarified (because I quote her constantly) by Illinois legislative pension thief Elaine Nekritz when she told a teacher who accused the legislature of stealing from our pension fund, “Stole it? We didn’t steal it. We never paid it in the first place.”
Even though the Illinois Supreme Court has affirmed the pension protection clause of our state constitution, many current teachers and future teachers have pensions that are at risk. Even current retirees cannot afford to let down our guard.
What is becoming increasingly clear is that there are a number of ways to steal a pension.
A few weeks ago the New York Times business writerwrote about the consumer threat and theft of 403(b) annuities that teachers and other public sector workers have their retirement savings invested in.
As risky as defined contribution annuity like a 401(k) may be as compared to our defined benefit pensions, they are a safe bet compared to a teacher’s 403(b)s.
This morning Bernard is back again writing about the 403(b) scam.
It is a must read for any current teacher concerned about their retirement savings.
How do investors know whether the product is appropriate for them?
Craig McCann, a former economist for the Securities and Exchange Commission, has built a computer model that is intended to make those calculations. He has employed close to a dozen people with Ph.D.s in math to dissect indexed annuity products as part of his firm’s work, which provides analyses for regulators and litigators representing investors. He said it took years for his team to master them.
“No agent selling these or investors buying these has the foggiest idea of how these work,” said Mr. McCann, who reviewed Ms. Lindert’s contracts.
But indexed annuities have to make sense for at least some investors, right? Perhaps for the incredibly risk averse? “No,” he said, without hesitation. “Never.”
Though it appears that investors have some exposure to the stock market, he says many are left with a return they could have achieved with a supersafe bond portfolio, without paying an obscured 2.5 to 3 percent annual fee charged by the annuity provider. “They are all Rube Goldberg machines,” he said.
What Bernard doesn’t go into much is the aiding and abetting that school districts and the two teacher unions do in carrying out this scam.
Both function to steer teachers to their approved annuity salesmen and firms.
The NEA does it in exchange for a fee from the investment company.
Regulations governing 403(b)s must be strengthened and the teacher unions must be made to look after the interests of their members on this issue.