Anne Tergesen and Gretchen Morgenson:

The pitch from the president of the Indian River County teachers union couldn’t have been clearer.

Liz Cannon, who heads the Indian River chapter of the Florida Education Association, urged union members to buy retirement investments from Valic Financial Advisors Inc. through a firm owned by the union. That way “we also make money,” she said in a November 2017 newsletter, through regular dividends.

What Ms. Cannon didn’t mention was that investments from Valic, a unit of giant insurance company American International Group Inc., can carry high costs that may translate to a smaller nest egg when teachers retire.

The setup is one of an array of similar deals in which unions and other groups get income from endorsements of investment products and services—often at the expense of teachers and other municipal employees.

The ties help explain why many local-government workers continue to pay relatively high retirement-plan costs, while fees in corporate-based retirement plans are often lower and have been falling for years.

At issue are 403(b) retirement savings plans for teachers and 457 plans for government workers—variations on the 401(k) plans many companies offer. About $900 billion was held in 403(b) plans for public-school teachers and 457 plans at the end of June, according to the Investment Company Institute, a mutual-fund industry trade group.

In the crowded market, an endorsement from a union or municipal organization or affiliate can help an investment-product provider stand out. It also can give the provider’s sales agents access to union meetings, teachers’ lounges, benefit-enrollment fairs and professional conferences to pitch retirement and other products.

The now retired Madison Teachers, Inc. Executive Director served on the WPS Board of Directors for some time. WPS provided health insurance (one of several choices) to taxpayer supported Madison School District teachers.