According to GAO findings, in accordance with the law establishing the TSP, the Department of Labor (DoL) conducts regular audits to determine the plan’s level of compliance with laws and regulations as well as to ensure the efficiency and effectiveness of operations, but DoL does not submit its audit reports directly to Congress, and has not yet been provided a way to communicate issues of critical concern to Congress.
Additionally, Congress requires FRTIB to submit its annual budget and other reports, and to undergo an independent financial audit; however, Congress has not held regular FRTIB oversight hearings, GAO found.
FRTIB’s fiduciary duties are similar to those of fiduciaries of private sector plans, and it has implemented policies and practices in several of the areas mentioned in DoL’s guidance for private sector plans, the GAO report said. However, the Federal Employees’ Retirement System Act of 1986 (FERSA) – the law that governs the administration of TSP – contains special liability protections for FRTIB members and the Executive Director.
Some concerns mentioned in the report include that the FRTIB has less discretion than private sector plans in setting investment policy since Congress dictates the investment options available to the TSP. The law governing the TSP specifies the number and types of funds that can be offered and requires that some of the funds track indexes. Changing investment options for the TSP requires legislation, the GAO points out.
In addition, responsibility for participants’ education often falls on the FRTIB and Office of Personnel Management (OPM). FRTIB is charged with developing educational materials for participants about TSP-specific issues and it also assists OPM, which is required to provide general retirement education to federal employees and train retirement counselors at federal agencies to provide information to federal employees.
The GAO suggests in its report that as the size and complexity of TSP have grown, an appropriate level of oversight of FRTIB is critical to ensuring that federal workers’ retirement savings are properly managed. The office previously recommended that Congress consider amending FERSA to require DoL to establish a formal process by which the Secretary of Labor can report to Congress issues of critical concern about actions of the Executive Director and FRTIB members.
The TSP held approximately $210 billion in retirement assets for 3.7 million participants as of February 2007.
The GAO report is here .