Federal investors eagerly awaiting to diversify retirement savings through two new investment options in the Thrift Savings Plan are going to have to wait indefinitely, the Federal Retirement Thrift Investment Board announced Tuesday.
The custom-built record-keeping system that will support the new funds won't be ready in October, as previously promised. The computer software that runs the new system has numerous defects that haven't yet been fixed. Rather than making promises it can't keep, the board, which oversees TSP operations, announced that a new implementation date will not be set.
"Although the board's contractor has suggested a spring 2001 implementation, it would be premature, given previous missed commitments, to set a new date until the contractor completes testing of the system and reports that all significant software defects have been fixed," said Roger W. Mehle, executive director of the board.
This is the second delay for the TSP modernization project. In January, the board announced a five-month delay of the project, which was originally scheduled to debut in May. The first delay, again due to software bugs and unfinished testing, pushed the implementation date to October.
But at a meeting with the TSP board last week, Fairfax, Va.-based American Management Systems, the contractor developing the new system, reported that an Oct. 1 start date would be risky due to problems in the new record-keeping system.
The primary feature of the new system is a daily valuation of accounts. The TSP's two new investment funds-the Small Capitalization Index Investment (S) Fund and the International Stock Index Investment (I) Fund-are dependent on the new system, so their release is also delayed.
"The new system is necessary for the TSP to provide additional benefits, but it is not required in order to carry out core TSP functions," Mehle said. "Our current system has proven its processing accuracy, and, although it lacks the ability to support the new benefits, it can remain operational indefinitely."
Currently, federal employees have three investment options available through the TSP: the C Fund, which invests in stocks, the F Fund, which invests in bonds, and the G Fund, which invests in government securities.
The TSP is the government's 401(k)-style retirement plan. More than 2.4 million participants have about $95 billion invested through the plan. According to the board, all TSP participants will be sent a special notice about the delays, and monthly updates on the progress of the new system will be posted on the board's Web site, www.tsp.gov.
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