Federal Pension Officials: System to be Fixed By September

July 28, 2003 (PLANSPONSOR.com) - While admitting that "mistakes were made" in launching a daily valuation system for the Thrift Savings Plan (TSP), officials of the federal worker pension plan insist members' problems in accessing the system should be cleared up by September.

In testimony before the US House of Representatives Committee on Governmental Reform, the chairman of the board and new executive director of the Federal Retirement Thrift Savings Board (FRTSB) said the board had undertaken intensive efforts to fix the new system’s problems, according to Washington-based legal publisher BNA. Things should be up to speed in three to five weeks, promised FRTSB Chairman Andrew Saul and Executive Director Gary Amelio.

TSP members have complained bitterly of having continuing problems in getting to the new recordkeeping system activated June 16.TSP members have reported they are often unable to access the Web site and that alternative telephone customer service access also has been plagued with problems (See  Thrift Savings Plan Recordkeeping System Still Floundering ). The $113-billion retirement fund covers more than 3 million federal and military employees and retirees and current and former congressional members.

An ‘Avalance’ of Complaints

Michelle Corridon of the Federal Managers Association said her group had received “an avalanche” of mostly negative comments from its members about the TSP Web site. FMA members reported slow login times, inability to access the TSP Web system, and having transactions cut off when they were disconnected from the TSP site, Corridon said.

FMA members also reported that attempts to resolve issues with the TSP telephone help line were frustrating. TSP members complained of often getting a busy signal, being put on hold or disconnected, and being provided incorrect information by those who did answer the phone.

Saul said that the Web system was designed to handle 50,000 hits per day, but unexpected technical glitches at the launch of the system had reduced capacity to fewer than 5,000 hits per day. Saul said most of the 170 glitches discovered in the system had been corrected and that the system was currently successfully handling approximately 60,000 hits per day.

Saul reported that the board also had worked with the Agriculture Department’s National Finance Center, which handles processing of the TSP accounts, in order to increase the number of telephone help lines from 375 to 900. Edward McPherson, USDA’s chief financial officer, told the committee that the finance center also had added a phone worker shift to extend the hours when help is available.

Caught up in the failure of the system to work as designed, the board was overwhelmed with work that had to be completed manually, which resulted in backlogs of member loan processing and other functions, officials admitted. Civil Service Subcommittee Chairwoman Jo Ann Davis (R-Virginia) noted that some TSP members who made early contact under the new system had their initial applications lost or were supplied incorrect information on which forms to use, so that their initial application had to be resubmitted.

Saul estimated that approximately 10,000 requests had become backlogged in the system but said the finance center had put extra staff in place to manually process loan requests, and set up two outsourced locations to handle the load.

Amelio said there was no process in place for identifying special cases, and commented that due to ethical rules the board was likely restricted in its ability to prioritize applications.

Van Hollen said it seemed likely the committee would have to later return to address the issue of how the board was going to handle the TSP members who suffered real financial losses as a result of the failures of the new system.

Problems Right From the Start

Committee members several times emphasized that implementation of the new computerized system was often delayed, including once when the board terminated its primary design contractor for the new system.

The board sued the terminated contractor, alleging fraud and seeking to recover funds expended on the project. The contractor countersued for a $58 million breach of contract. Ultimately, the board settled the suits for a $5 million payment by the contractor (See  TSP Daily Valuation Launch Delayed – Again  ).

Approximately $36 million was charged to TSP members for money spent under the contract before it was terminated. Saul said this amounted to a charge to members of approximately $0.30 per $1,000 in deposited funds. Saul defended the board’s decision to settle the suits saying that continuing the litigation would have resulted in increased costs to TSP members.