Thread: Review of TSP - National Accounting Firm & GAO

This is an email sent to Steven Barr, columnist at the Washington Post.

Mr. Barr:
Thanks for your November 20 article on pending Thrift Savings Plan trading restrictions. This is definitely an article and an issue that grabs our attention. Since TSP is essentially part of a package that transfers a major portion of retirement planning and responsibility to Federal workers, I'm surprised that it doesn't receive much more attention. Moreover, I believe we should be very concerned about the limited services we receive within TSP. In the big picture, it was not too many years ago that TSP fund transfer functionality was provided in a grossly archaic manner resulting in weeks to execute transfers. The Federal Retirement Thrift Investment Board's initial answer to the neglected system was a mismanaged computer modernization contract that essentially failed in the tens of million dollar category.
Now, that the Board is paying a little more attention to investment patterns and costs, maybe it's a good time for full disclosure. For example, what's the cost of rebalancing L Funds daily to their target allocations? In reality, even if all these kinds of cost are considerable, they all add up to insignificant expenditures factored on a cost per individual account basis.
Since the TSP operation is a critical and cherished benefit to the Federal Workforce and because it is one of the largest retirement funds in the world, we should have the benefit of a study by a national accounting firm. This study should address how the TSP could function for it's account holders in a 21st Century financial environment. Additionally, we would be well served to have this study and the current management practices of the Board reviewed by David Walker at the GAO.
Some of the Board's rationale and recommendations for restricting and punishing frequent transfers sounds myopic. For example, not wanting to charge for "extra" transfers because people who accidentally complete a transfer would be charged is a typical bureaucratic response to having anomalies drive the process. When we hear that sort of explanation, it causes concern about the financial and investment expertise that is watching over our TSP interests.