A lawsuit has been filed and is seeking class action status against the school system for allegedly betraying its members by accepting millions of dollars in kickbacks for promoting high fee retirement plans. The lawsuit was filed in US District Court in Tacoma on behalf of 57,000 teachers and school personnel who invested with the Valuebuilder Plan offered by Security Benefit Life Insurance Co. and Nationwide Life Insurance Co.
According to the lawsuit, other plans on the market performed better and charged comparable prices for 403(b) plans than Nationwide and Security Benefit. The case claims the National Education Association (NEA) and its for-profit subsidiary, the NEA Member Benefits Corp., accepted payments from the companies to endorse those retirement plans. Such payments created a conflict of interest and cost NEA members tens of millions of dollars in lost retirement savings, in violation of the Employee Retirement Income Security Act.
According to the complaint, Nationwide was the exclusive plan provider to NEA from 1991 to 2000, when it sold the Valuebuilder program, with $860 million in assets, to Security Benefit for $72 million. The lawsuit seeks the disgorgement of any kickbacks paid to the NEA and excessive fees paid to Security Benefit and Nationwide, as well as damages for any investment losses suffered by the union's members.
