The Re-Education of CalSTRS

II Magazine Americas

An extensive history of how CalSTRS got to where it is today. This article also profiles the CEO and CIO, a good read for any teacher in California.

ScottyD

Another 403(b) TPA Files Bankruptcy

QUADS Financial Group, Inc

Add Quadsweb to the list of third party administration firms that service 403(b) plans that have filed bankruptcy. Quadsweb was not a traditional TPA in the 403(b) sense and they didn't, as far as I know steal any money. They have been taken over by a conservator and are reorganizing under Chapter 11.

We can't put this failure in the same category as Plan Compliance Group, NEBSonline, and Flagship/Horizon as this entity was taken over before money could be stolen (not saying there was any attempt to steal money). However, its failure is further proof that districts need to take great care in who they do business with.

Scott Dauenhauer, CFP, MSFP, AIF
949-916-6238

IRS pending regulations seen as consolidating 403(b) market - InvestmentNews

IRS pending regulations seen as consolidating 403(b) market - InvestmentNews

FYI.

They never quote anyone who actually has real knowledge and a different point of view at Invesment News...oh well, their loss.

ScottyD

Beginning of The End For NEA Valuebuilder?

Class Action Newsline

It looks like the NEA Member Benefits is about to reap what it sowed, it will be sued. Though only an investigation, Keller Rohrback would not go public if they didn't have the evidence needed to go after this horrible product.

What follows is the press release:

Keller Rohrback L.L.P. Announces Excessive Fee Investigation Regarding NEA Valuebuilder Program

SEATTLE, April 7, 2007 (PRIME NEWSWIRE) -- Keller Rohrback L.L.P. (www.erisafraud.com) today announced that it is investigating the National Education Association ("NEA") Valuebuilder 403(b) variable annuity plan. The plan, which is sold by an insurance company called Security Benefit, is the only retirement program endorsed by the NEA. In exchange for the endorsement, Security Benefit provides compensation to the NEA. Keller Rohrback is evaluating whether the NEA endorsed the program because of the payments, as opposed to a prudent evaluation of whether the plan is in the best interests of NEA members.

A 403(b) plan is a tax-deferred retirement plan available to employees of educational institutions and certain non-profit organizations. A common 403(b) plan investment option is a variable annuity. A variable annuity is an annuity plan that enables participants to direct their salary deferral into certain specific mutual funds. As many commentators have noted, 403(b) annuity plans often charge excessive fees that substantially diminish participants' retirement savings. In addition, 403(b) providers often choose mutual funds for their plans based on revenue sharing deals with the mutual fund companies, as opposed to a prudent evaluation of the merits of the fund option. Recent articles have drawn attention to the fees charged by the NEA Valuebuilder plan.

If you are a participant in the NEA Valuebuilder 403(b) variable annuity plan, and would like to speak with us regarding our investigation, please contact any member of our team: paralegal Jennifer Tuato'o or attorneys Cari Campen Laufenberg, Derek Loeser, or Lynn Sarko, toll free at 800-776-6044, or via e-mail at investor@kellerrohrback.com.

Keller Rohrback is one of America's leading law firms handling ERISA retirement plan litigation. We are committed to helping employees and retirees protect their retirement savings. Keller Rohrback serves as lead and co-lead counsel in numerous ERISA class action cases, including cases against Enron, WorldCom, Inc., HealthSouth, and Marsh & McLennan Companies, as well as ERISA cash balance pension plan cases, including JP Morgan Chase & Co. Keller Rohrback has successfully provided class action representation for over a decade. Its trial lawyers have obtained judgments and settlements on behalf of clients in excess of seven billion dollars.

CONTACT:  Keller Rohrback L.L.P.
         Jennifer Tuato'o, Paralegal
         (800) 776-6044
         investor@kellerrohrback.com
         www.erisafraud.com 

Imperfect Union - Forbes.com

Imperfect Union - Forbes.com

Neil Weinberg details the class action brought against the New York State United Teachers and ING accusing wrongdoing in their 403(b) plan.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com
949-916-6238

Trust Sued Over Backing Retiree Plan - New York Times

Trust Sued Over Backing Retiree Plan - New York Times

NYSUT, the New York Union that settled with Elliot Spitzer is now being sued as part of a class action under a very interesting theory.

This is a good development in that these entities need to know that abusing their members is not going to go unpunished. Its only a matter of time before the NEA Valuebuilder product is targeted, the NEA Member Benefits organization in my opinion is one of the worst providers of 403(b) products in the nation.

Scott Dauenhauer, CFP, MSFP, AIF
949-916-6238

Reimers Pleads Guilty - FBI Says $7 Million Gone

LawFuel - The Law News Network

Francis "Bill" Reimers pleaded guilty on March 23rd to six counts of mail fraud and one count of money laundering. Bill stole from school districts and individuals. A guilty plea, while nice, is of little solice to those who lost so much while Bill and his family lived high on the hog.

I never met Bill, but did talk to him on several occasions. I hope God will forgive him, there are many out there who have been wronged that I think probably won't. They are now stuck living a retirement that they thought would be secure.

I have a feeling this isn't over, more will come out as time goes on.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com
949-916-6238

Quotas tied to benefits irk advisers

Quotas tied to benefits irk advisers - InvestmentNews

Ever wonder if the agent selling you that 403(b) had other things on his or her mind? Perhaps the policy being sold to you wasn't in your interest, or perhaps the policy was sold to you for other, more nefarious reasons. Many companies offer wonderful vacations to reps who sell certain, usually proprietary products, however, a story by Investment News is shedding light on another interesting perk that is affected by product sales......Health Insurance.

It turns out that at least three major players in the 403(b) market use health insurance benefits as a way to get their reps to sell the companies own proprietary products. If reps or agents don't sell enough of the firms products they won't get health insurance for themselves, their spouse, or their children...can you say conflict of interest?

I don't believe you should ever purchase proprietary products, and this is just one more confirmation of that belief. The question remains, are you being sold a product because it is best for you or because your advisor needs it in order to ensure (actually insure...no pun inteneded) the health of his family? Advisors shouldn't be faced with this dilemma, but then again, they choose who they work for, in this case, it isn't you.

Most advisors are not fiduciaries (required to put your best interest firs) and most firms cannot allow them to be fiduciaries because of conflicts such as utilizing health insurance benefits to force agents to sell more proprietary products. What a shame.

The 403(b) industry needs reform.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com
949-916-6238

Tax-sheltered annuity regs expected by mid-2007 - CCH® Pension and Benefits News Story - 3/14/07

Tax-sheltered annuity regs expected by mid-2007 - CCH® Pension and Benefits News Story - 3/14/07

The new regs are coming, school districts need to start preparing.

Scott Dauenhauer, CFP, MSFP, AIF
949-916-6238
www.meridianwealth.com

Feds charge Danville investment executive Reimers

ContraCostaTimes.com | 03/12/2007 | Feds charge Danville investment executive Reimers

Here is an update on the Bill Reimers/Plan Compliance Group scandal.

Plan Compliance Group is the third party administrator for school districts that stole over $3 million of school district money and spent it on a lavish lifestyle. He also stole money from a federal insurance program and from several individuals who trusted him.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com

Investment Expenses Higher Than They Seem

Dallas Morning News | News for Dallas, Texas | Scott Burns: Columns 2007

Good column on why it is important to watch fees in your retirement plans, they are essentially like another tax on your money. High fees rarely lead to higher returns. Scott Burns has a fee calculator on his website.

Scott Dauenhauer, CFP, MSFP, AIF
949-916-6238
www.meridianwealth.com

Investors' losses keep mounting

Investors' losses keep mounting:

This is a bit of an old story, but I thought you'd like an update.

ScottyD

www.meridianwealth.com

New public employees should work to 65

Article - Opinion - California Focus: New public employees should work to 65

Here is an article written by Keith Richman that is advocating all new public employees work till 65. This might be a good idea for most public employees, but I do not believe it is a good idea for public school teachers.

For one thing, I am doubtful that there will be much cost savings in getting educators to work an extra 2 - 10 years till age 65. Assume that a 60 year old educator who wants to retire today has a total compensation package of $90,000, and a new teacher has a total compensation package of say $45,000. The present value of the difference in compensation is about $200,000.......I say let that educator retire.

I work with a lot of educators and on average, by the time they reach 55 they are getting tired. They haven't lost their passion for kids, its just that 30 years of being in the classroom can really wear someone down. Don't get me wrong, just because a teacher has reached the age of 55 doesn't mean they are no longer effective, in fact many of them have more energy than I feel I do at times. It's just that there are some educators who reach these stages and feel that continuing to teach will begin to wear on them physically and mentally, they need a break. They need to retire.

Allowing an educator who has spent his or her life serving the children to retire on a timeline that is reasonable (the current system is reasonable) not only encourages more and better teachers to enter the profession, but it encourages those teachers who feel like they just can't do it anymore to retire with grace. Imagine if we forced a teacher who simply didn't want to teach to continue to teach, just so they wouldn't be impoverished in retirement.....is this best for our educators and our students?

Perhaps I see where Mr. Richman is going with this. A teacher who is forced to teach till age 65 might be more worn down and statistically may not live as long.......thus reducing the pension liability.

I'm all for fiscal responsibility, in fact my stomach churns when I see the deficits being piled up everywhere I look, but when it comes to our teachers in California, we need to take a hard look at so-called "simple solutions", they may not turn out to be so simple.

Scott Dauenhauer, CFP, MSFP, AIF
949-916-6238
www.meridianwealth.com

The American Spectator

The American Spectator

Provocative article about the now closed Social Security loophole that allowed educators to get spousal benefits by working only one day in a job covered by social security. The cost to the government is in the billions.

This article is referring to the Government Pension Offset (GPO) which affects social security benefits of spouses who work in the public arena and are covered by a public pension, but don't pay into social security. What the article leaves out is how unfair the GPO is to educators. Let me give you an example:

Suppose Sally went to work in the private sector and paid into social security, Sally's husband stayed at home with the kids and raised them, not ever working in a paying job or in a job paying into social security (notice how I didn't say "not working!"). John, who stayed at home, is not eligible for social security benefits on his own, instead the he is eligible based upon Sally's contributions. Sally's contributions INCLUDE a spousal benefit. John will recieve 50% of the amount that Sally receives and upon Sally's death, John's benefits from social security will be the same as what Sally was recieving.

The key in this story is that John is eligible based on his spouse, Sally, even though he never worked. Sally's contributions earned her a spousal benefit for her husband. Now, let's suppose that instead of staying home all those years with the kids, John went to work after the kids were old enough to goto school. John in fact went to work as a teacher. He paid into his state teachers pension fund, but in his state he was not required to pay into social security. When John retires he will NOT be eligible for a social security spousal benefit based on Sally's contributions (technically he might be eligible for something, there is a formula, but that is beyond our discussion).

The only difference between the two situations is that John worked in a public pension system and didn't contribute to Social Security. In both situations John didn't contribute to social security, but in one he recieved a benefit, in the other he didn't. This makes no sense. Either Sally earned a spousal benefit or she didn't - which is it?

The teachers in The American Spectator are made out to be criminals - they are not, they are simply trying to collect on something that should rightfully be theirs. They went through a perfectly legal process to gain these benefits and they shouldn't be punished or have these benefits taken away - they are not criminals like Dennis Koslowski.......to whom they were compared.

My only concern is that its a bit unfair that those 20,000 teachers got to do it, and the hundreds of thousands of others didn't. I agree that it is a major drain on social security, but that is a funding problem. Social Security if fundamentally flawed in its operation and needs to be reformed, but the same can be said for the Governement Pension Offset.

To all you Texas Criminal Teachers (TCT's) out there.......You have at least one supporter! I do ask one thing of you, perhaps think about spending a little bit of that extra money you receive on helping the rest of the teachers get reform for the GPO.

ScottyD

Teachers Sue Metlife

nwi.com

A story about teachers who were allegedly lied to, misled, and are now fighting back. There are more and more stories coming out about teachers who have had enough with being misled by the entities they trust.

Is the NEA next? It seems to me that the NEA is much worse.

I'll follow this lawsuit and keep you up to speed. If I remember correctly there is another union in California that endorses Metlife......

ScottyD

WHAT TEACHERS MAKE

The dinner guests were sitting around the table discussing life.

One man, a CEO, decided to explain the problem with education. He argued, "What's a kid going to learn from someone who decided his best option in life was to become a teacher?"

He reminded the other dinner guests what they say about teachers:
"Those who can, do. Those who can't, teach."

To stress his point he said to another guest; "You're a teacher, Bonnie. Be honest. What do you make?"

Bonnie, who had a reputation for honesty and frankness replied, "You want to know what I make? (She paused for a second, then began...)

"Well, I make kids work harder than they ever thought they could. I make a C feel like the Congressional Medal of Honor. I make kids sit through 40 minutes of class time when their parents can't make them sit for 5 without an I Pod, Game Cube or movie rental...
You want to know what I make?" (She paused again and looked at each and every person at the table.)

I make kids wonder.
I make them question.

I make them criticize.
I make them apologize and mean it.
I make them have respect and take responsibility for their actions. I teach them to write and then I make them write. I make them read, read, read. I make them show all their work in math.
I make my students from other countries learn everything they need to know in English while preserving their unique cultural identity. I make my classroom a place where all my students feel safe. I make my students stand to say the Pledge of Allegiance to the Flag, because we live in the United States of America. Finally, I make them understand that if they use the gifts they were given, work hard, and follow their hearts, they can succeed in life.

(Bonnie paused one last time and then continued.) "Then, when people try to judge me by what I make, I can hold my head up high and pay no attention because they are ignorant... You want to know what I make?

I MAKE A DIFFERENCE. What do you make?"

THIS IS WORTH SENDING TO EVERY TEACHER YOU KNOW.
THERE IS MUCH TRUTH IN THIS STATEMENT:
"Teachers make every other profession "
--
Karen E. Clarke

NEA Valuebuilder AKA ValueKiller Articles

With the recent announcement of the NASD partnering with the NAIC and the NEA Member Benefits (distributor of the high cost NEA Valuebuilder Variable Annuity) I thought it appropriate to link to a few articles that mention this horrible product.

LA Times Article - Unions Advice is Failing Teachers

San Diego Union Tribune Article - Saving For Retirement Harder wtih New 403(b) Law

403bWise Article

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com

NASD Partners with NEA Valuebuilder?

NASD - Press Room - News Release - 11/8/06

This has to be a joke. This link will take you to a press release that announces a grant that will involve the NEA Member Benefits with investment education. What follows is my e-mail to the NASD:


"I wanted to convey to you my shock with regards to the NASD partnering with NEA Member Benefits. The NASD should be investigating the NEAMB, not partnering with them. The NEA has been selling the NEA Valuebuilder product - an excessively priced Variable Annuity and Mutual Fund program to its members for years. This program is worse than the one Spitzer busted in New York (ING and NYSUT). The NEAMB is an RIA and they are not fulfilling their fiduciary responsibility to the plan. There is excessive revenue sharing, poor oversight, and kickbacks to unions and agents involved. You should not be endorsing NEAMB, by doing so you are endorsing an entity that exists to transfer retirement assets from its members to the NEAMB (probably to subsidize other programs). You should be sending subpoena's, not endorsements."

This is absolutely ridiculous. NEA Member Benefits has been ripping off teachers for about a decade now and they are getting rewarded for it by regulators, what world are we living in.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com

Plan Sponsor: Revenue Sharing

Magazine Articles [PLANSPONSOR.com]

If you read this article you would think that a revolution is happening, it isn't. Providers are not rushing to disclose revenue sharing agreements, they are only doing so when forced and they are being dragged kicking and screaming along the way.

Instead of figuring out the best way to disclose revenue sharing agreements (Let's be honest, Kickbacks), why don't we simply do away with them?

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com

News Articles [PLANSPONSOR.com] - FL Pension Plan Accuses ING of Revenue Sharing Fraud

News Articles [PLANSPONSOR.com] - FL Pension Plan Accuses ING of Revenue Sharing Fraud

This is why I don't believe revenue sharing should be used in DC plans.

Scott Dauenhauer, CFP, MSFP, AIF