Fitzgerald Calls for TSP to Bid RK Duties

US Senator Peter Fitzgerald (R- Illinois) said TSP recordkeeping should be outsourced from its current handling by 433 US Department of Agriculture employees at the National Finance Center in Louisiana.

“It is my view that the TSP could save significant funds if this contract were opened to competition, which would directly benefit the plan’s 3.2 million participants,” Fitzgerald said in a news release issued by his office. The $131-billion TSP covers 3.2 million federal employees

According to Fitzgerald, in 2003, the TSP charged only 11 basis points, or 11 cents per $100, in all fees related to operating the funds. That compares to average comparable index funds in the private sector charging 63 basis points, according to Lipper Services — a figure that does not include transaction costs, the Fitzgerald statement said.

Fitzgerald has incorporated some of the TSP-style management practices in his proposed legislation, the Mutual Fund Reform Act of 2004, co-sponsored by Susan Collins (R-Maine) and Carl Levin (D-Michigan) (See Senate Fund Reform Bill Would Kill 12b-1 Fees ). Among other things, the bill calls for independent boards of directors, strengthening board and fund advisers’ fiduciary duties, adding stringent accounting and auditing procedures, and enhancing disclosure and transparency of fund fees and expenses.

Also appearing Monday at the Senate’s hearing was US Department of Labor Deputy Assistant Secretary Alan Lebowitz who announced that officials had concluded that TSP participants have not been harmed by market timing or late trading – the twin areas of focus for the ongoing fund trading probes. The text of his comments are at http://www.dol.gov/ebsa/newsroom/ty030104.html .