The Wall Street Journal reports that Attorney General Eliot Spitzer’s office said ING annually charged NYSUT investors as much as 2.85% in fees and expenses while delivering only limited benefits for Opportunity Plus, a 403(b) tax-deferred annuity. “The unit endorsed the plan (even though cheaper alternatives were available) in return for undisclosed payments of as much as $3 million per year,” according to the office’s release.
The investigation focused on the fact that the union did not disclose to the more than 50,000 New York teachers and other school district employees who invested in Opportunity Plus that it was receiving payments from ING.
According to the announcement on the NYSUT’s Web site, the union will reimburse the attorney general’s office $100,000 for the investigation in addition to immediately adopting the following reforms:
- Hiring an independent consultant to supervise the union’s changes to the program as well as the search for other investment options,
- Giving union members a program that offers free, unbiased professional advice so that, while the trust endorses any retirement products, participants can be aware that there are alternatives,
- Allowing Opportunity 403(b) participants to transfer without penalties to any plan the trust recommends,
- Reporting all endorsement fees the trust receives, as well as administrative expenses,
- Using fees the trust received from 403(b) providers only for reimbursing expenses,
- Training all employees and trustees about product endorsement and conflicts of interest and
- Communicating all changes – present and future – to all members and participants.
Following the announcement of the NYSUT investigation (See NY Retirement Fund in Payment Arrangement with Investment Company ), the attorney general’s office said it will conduct a broad investigation of the marketing of retirement investment products (See NY Attorney General To Investigate 401(k) Investments ).
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