The More Things Change, The Better They Get at TSP
Transformation is underway at the Thrift Savings Plan.
The retirement program for more than 3 million civil service, postal and military personnel has upgraded its technology platforms, introduced toll-free telephone service and added a new investment option.
Through the TSP's Web portal, employees can get to their retirement accounts more quickly and move their money among stock, bond and government securities funds. The changes are posted to accounts daily in most cases.
Congress established the TSP in 1986 as a way for government employees to save for retirement. It operates much like private-sector 401(k) plans and has turned out to be incredibly popular with employees. In a federal benefits survey last year, 89 percent cited the TSP as important to their decision to join and stay in the government.
The TSP transformation could not have come at a better time. The TSP has become one of the world's largest defined-contribution plans, featuring pretax contributions, tax-deferred savings and matching contributions by agencies. The plan has been growing at the rate of $1 billion a month and, at the end of December, reported assets of $173.3 billion.
The operating improvements at the TSP flow from decisions made by board members appointed by President Bush and confirmed by the Senate three years ago. The Federal Retirement Thrift Investment Board, chaired by Andrew M. Saul of New York, hired Gary A. Amelio , a private-sector executive specializing in employee benefits, as executive director in May 2003 to bring change to the agency.
Saul and Amelio inherited a bungled computer project for a new record-keeping system, which had been started in 1997 and wasted $36 million, a Senate investigation found. The replacement system got off to a rocky start in 2003 because a software bug slowed online access.
Saul called on Amelio to conduct a wide-ranging review. That effort appears to be paying dividends.
The TSP now operates with a new mainframe computer, in Northern Virginia, that runs 10 times faster than the old system. An emergency backup computer, a first for the agency, was installed in Pennsylvania, and can be up and running in less than an hour if a disaster hits the Washington area.
Amelio also moved to enhance TSP's telephone service. The TSP got its first toll-free line; hours for customer service were extended, and call centers were established in Cumberland, Md., and Clintwood, Va.
The TSP previously relied on the Agriculture Department's National Finance Center in New Orleans to provide computer and telephone services, and the decision to move TSP operations to other locations seemed prescient in light of the damage caused by Hurricane Katrina last year.
In other changes, Amelio hired a St. Louis firm to collect and deposit payments, cutting the turnaround time on cashing checks from participants from seven days to one. He has tightened the rules on loans to lower administrative costs.