House committee to investigate TSP system

The House Government Reform Committee will review customer service problems associated with the Thrift Savings Plan's new automated record keeping system at a July 24 hearing, a committee spokesman said Thursday.

Six years in the making, the new automated record keeping system was finally launched on June 16 only to encounter Web site problems. While TSP officials tried to fix the problems, they advised participants to access the system by telephone, but the subsequent barrage of calls to the system prevented some participants from getting through. The delays increased the frustration many participants had harbored over the years of delays and the millions of dollars spent building, then launching the system.

"People are very upset and we understand why," TSP spokesman Tom Trabucco said Thursday. "We know we have a problem with the phones and we are working on that."

Under the new system, federal workers should be able to make daily changes to their Thrift Savings Plan investments, a significant change from the monthly upgrades provided under the old system. The 3 million TSP account holders should also be able to access their account balance updates each day, transfer money from one fund to another, change the amount of their monthly payouts after they retire and make a partial withdrawal of money, rather than a full withdrawal, as soon as they retire. Another feature of the new system allows participants to submit loan applications electronically, though there is still a paper-based step for married Federal Employees Retirement System (FERS) members, according to Trabucco.

"The TSP new system may be up and running, however it is near impossible to reach anyone by phone or complete the application electronically as was promised and advertised as a special new feature," a federal employee recently wrote to GovExec.com. "It's one thing to say the system is working. It's quite another to say so when it is patently not true. In fact, saying the TSP is working is like [President] Clinton saying he didn't inhale or have an affair with [Monica] Lewinsky. It may be true, but only if words are redefined."

During the past month, many GovExec.com readers have complained that their loan applications seem to be in limbo, interfund transfers have not been completed, and attempts to contact someone for help have been futile.

According to Trabucco, 106,641 interfund transfers were processed and 12,120 loans were issued as of July 15, but a data entry backlog has created some problems.

"We do have a backlog of data entry work and that includes loan repayment checks, paper loan applications and paper withdrawal applications, but we've brought more resources to bear on this and are working through it," Trabucco said. "What we are trying to do is work through, in particular, this data entry issue and get those moving through. We think that things will be improving when that's done."

Trabucco also noted that the Web site is handling as many as 50,000 transactions an hour, with the highest volume of Web site hits occurring between 8 a.m. and 12 p.m. EST.

The board hired American Management Systems in 1997 to modernize the computer system and give federal employees more tools to manage their 401k-style retirement accounts. The $30 million project was supposed to be completed by May 2000, but when the implementation date was moved back four times and the budget tripled, the board fired AMS in July 2001. The board sued the Fairfax, Va.-based company for $350 million in damages and AMS filed a breach of contract suit against the board. Recently the two brokered a settlement in which TSP participants will pay $36 million for the failed contract, along with the more than $33 million paid to the contractor who took over the project after AMS was fired.