Senators seek broader TSP outreach efforts

Lawmakers this week praised nominees to second terms on the board that oversees the federal employee Thrift Savings Plan, saying they had restored credibility to the plan and upgraded its customer service while lowering the cost to participants. But senators also called for greater financial literacy to prevent panic during economic downturns and new efforts to increase TSP enrollment among members of the armed services.

"I've had a very good relationship with the TSP board," Sen. George Voinovich, R-Ohio, told Alejandro Sanchez, Andrew Saul and Gordon Whiting at a hearing on Thursday. "They've acted responsibly, and you folks have a very heavy burden on your shoulders, because your decisions have a lot to do with the retirement of our federal workers, and the issue of educating our federal workers is something you ought to work on as aggressively as possible."

Saul, who served as chairman of the Federal Retirement Thrift Investment Board during his last term, said such educational efforts were under way, and were especially important during significant downturns in the stock market. But he also said TSP's offerings were designed to help employees weather downturns.

"We've had five years of tremendous growth in the economy and tremendous growth in the financial markets," Saul said. "We have had a rough quarter. Our plan is an index fund, which does track the markets. I encourage people who are not sophisticated, financially market-oriented people, to take a look at our life-cycle funds, which are the appropriate choice for times like these."

Whiting said the board has scheduled 355 educational sessions for participants, and will emphasize that they shouldn't approach the plan expecting immediate returns or intending to play the stock market, but rather that they should make regular contributions aimed at long-term growth in their accounts.

Sanchez said board members were particularly concerned with boosting the participation of military service members in the TSP. He noted that the board had met with representatives of the different services, and said he hoped the meeting would spark further cooperation.

"While half the active duty of the Navy is in the plan, and a third of the Air Force participates, we really need to increase the Army's participation," Sanchez wrote in response to questions from the Senate Homeland Security and Governmental Affairs Committee. "While participation from the armed services has nearly doubled in the past five years, more needs to be done."

Voinovich and Sen. Daniel Akaka, D-Hawaii, said they were impressed that costs had fallen during Saul, Whiting and Sanchez's first terms. Saul said that was an important goal, but costs would rise temporarily in the next two years because of infrastructure improvements.

"We have embarked on a plan to increase and modernize the technology of the TSP, and that is going to entail an increase this year and next year," he said. "We need to be sure that our infrastructure and our staff can cope."