Yesterday, John told us how employee John McHenry was told that to get out of the Teamsters-controlled pension plan he would have to “quit, be fired or die.”

An article in yesterday’s New York Post demonstrates why McHenry was wise to opt out of the union pension plan. In addition to being massively under-funded (only 3.2% of multi-employer union pension plans have enough assets to pay the promised benefits), it seems that NEA union officials have taken to getting kickbacks for endorsing under-performing, high-fee investment plans to teachers:

Not including management fees, the NEA’s only officially endorsed "retirement program" – the Security Benefit Life Insurance Corporation’s Valuebuilder annuity – charges 0.9 percent to 2.6 percent a year. Throw in management fees, and the least expensive option costs a teacher 1.73 percent of her account balances each year, while the most expensive costs 4.85 percent.

Over time, a fee that large is devastating. Without inflation, the educator would have to earn nearly 5 percent each year simply not to lose money. Consider a teacher who socks away $500 a month and earns an average yearly return of 10 percent for 35 years: She’d wind up with $1,788,760 upon retirement – quite a sizeable nest egg. But if she were paying 4.85 percent in fees, she’d accumulate less than one-third as much – just $587,854.

It appears that the NEA is willing to endorse a shoddy plan in exchange for a contribution to its coffers. In 2004, the union collected nearly $50 million from the investment vehicles it endorsed.