Legislature 2008: Teacher Pensions

Seeking to get to the bottom of their paltry returns, The Associated Press reports that "teachers in West Virginia's 401(k)-style retirement plan invested too heavily in an option ill-suited for the long term, leaving the typical account with less than $34,000."

AP charted the rate of return for the Teachers Defined Contribution program and its investment options. The most popular has been a fixed annuity from VALIC that guarantees a minimum 4.5 percent yield.

"Program statistics suggest that the VALIC option's annual return averaged 5.75 percent since TDC began in 1991," AP reports. "That proved a boon during 2002's Wall Street downturn, when other TDC options suffered losses as great as 18.3 percent. But the annuity's return has generally lagged behind that of most of the plan's other options."

"In some years, that's a great thing to be in, with its fixed rate," state retirement board Director Anne Lambright told AP. "It's a safe investment, but it's not necessarily a safe one to have for a 30-something-year-old."

VALIC is now AIG Retirement, which stands by its product, spokesman John Pluhowski told AP. "We were employed by [the retirement board] in the early 1990s to enroll educators into the state's retirement plan," Pluhowski said. "Our services did not include financial planning or the offering of investment advice."