TSP tech upgrade progressing, officials say

An upgrade to the Thrift Savings Plan's aging information technology systems and capabilities is coming along, said officials overseeing the program on Tuesday.

Mark Hagerty, chief information officer for the TSP, said at a monthly meeting of the Federal Retirement Thrift Investment Board that a two-year plan to upgrade the TSP's technology capabilities is on track. The plan involves replacing mainframe computers with newer technology offering more memory and faster processors, consolidating and replacing servers, modernizing IT networks and improving storage capacity.

"The most important thing for us is to make sure the security of these systems is able to keep up with the growth of this plan," said Andrew Saul, chairman of the TSP board. "The plan has doubled in asset value and has more than 3.8 million participants."

Hagerty said that, so far, progress includes the procurement and installation of new mainframe computers at the TSP's primary and backup sites and the acquisition of new network monitoring software. Additionally, the agency has boosted security by conducting penetration tests of its systems and by moving forward to buy fraud detection and mitigation software and an anti-phishing service, Hagerty said.

In September, the board backed a 24 percent increase in the agency's budget for fiscal 2008, largely to support the systems modernization. While officials said the current technology had performed well handling an influx of transactions, Hagerty recommended "skating ahead of the puck" by making upgrades before they become urgent.

The upgrades will allow the encryption of data "at rest" -- data stored in computer databases or file systems -- and enable a mandatory switch to the next generation of the Internet, known as Internet Protocol version 6. The modernization also is expected to help decrease the time needed to transfer operations if a system fails.

"While we do not expect significant overruns to this initiative, we do anticipate a long-term financial obligation to support the increased software maintenance costs associated with the major performance improvements," Hagerty said.

The update of the tech upgrade came as the Labor Department presented its annual audit of TSP operations to the board. While Labor concluded that most of the TSP's plans and policies were consistent with a 1986 federal employee retirement law, the agency recommended TSP strengthen information security over laptops and portable devices.

To boost security, auditors said TSP officials should encrypt all hard drives on agency-issued laptops, consider strengthening the password composition rules for portable devices and enforce the use of virus scanning for all external laptops before they're allowed to connect to the agency's network.

Meanwhile, officials touted the benefits of the plan's lifecycle funds, which shift investments from risky to more conservative blends as participants grow older. Officials noted that even in January, a volatile month for the markets, the L funds experienced significantly lower losses than the underlying funds. The returns on the L 2040, 2030 and 2020 funds also have surpassed all equity funds besides the international fund since their inception, officials added.

"This is what I was waiting for; I wanted to see how the L Funds would perform when the markets took a big hit," Saul said. "Those who are not sophisticated investors should really take a look at the L Funds. It's a really good way to diversify investments."

Officials also said they plan to publish in early March interim regulations that would restrict to two the number of TSP transfers participants can conduct each month. The regulations will be available for public comment for 30 days, officials said.

"If there's a better idea out there, we'll modify our approach," said Gregory Long, executive director of the Thrift Savings Plan. "Assuming there is not a significant change, we'll be making this active in April or May."