Thrift Savings Plan Overhaul Moves Forward After Bumpy Launch

The Federal Retirement Thrift Investment Board has officially rolled out a new investment platform for the Thrift Savings Plan, the retirement plan for federal employees and members of the uniformed services. It currently serves approximately 6.1 million people. The updated investor platform went live on June 1, and although the initial transition was bumpy, FRTIB has made moves to work out the kinks and hopes that the new system will better position the TSP to respond to continuing changes in how retirement programs are managed.

How It Started

The board first identified the need to transition in 2016. At the time, FRTIB managed both the hardware and software for its retirement platform in-house. It also contracted directly with its recordkeeper and oversaw a handful of internal offices that worked directly with beneficiaries to deliver retirement benefits. The structure of the plan involved a lot of time and cost overhead, and the platform technology itself was a bit out of date.

FRTIB spent several years planning what new features should look like and thinking through system requirements that would allow the board to respond to changes in retirement rules. “We spent a lot of time and money making sure that the old system was secure, but it wasn’t agile, so any change required a lot of resources,” explains Kim Weaver, director of external affairs for FRTIB. “When Congress changed the RMD age, for example, making that change in the old system required a lot of work. We also wanted the tools to be able to focus on retirement income for our participants in ways that we couldn’t with the old system.”

In November 2020, FRTIB awarded Accenture Federal Services and Alight Solutions a contract to update the platform. Accenture provided the technology and customer service call centers. Alight Solutions would take over as the new recordkeeper. The new platform also supports FRTIB’s efforts to provide access to a menu of mutual funds that participants can invest in, as well as a mobile application and a number of self-service tools participants can use to support their retirement.

How It’s Going

The new platform went live on June 1. Users were required to set up new logins and many ran into problems. Weaver says the initial login process was set up for very high security, which made it difficult for users to verify their identities. The customer service lines were also understaffed relative to the amount of people who were having problems creating a new login. Adding to the headache for some users was the discovery upon login that beneficiary information didn’t get transferred over if the new service was unable to verify the designee. Additionally, historical returns and balance information from the old recordkeeper weren’t carried over to the new platform, which briefly led some users to think their account information was missing or incorrect.

Many of these issues have largely been resolved. According to a briefing provided at the June 28 FRTIB board meeting, more than 300 new customer service agents have been added to support the transition; 1.2 million users have also set up new accounts, and the system has handled 3.09 million logins. Weaver adds that users are able to update beneficiary agreements if their original designations didn’t make it to the new platform. “We are still refining some aspects of the platform,” she says. “The beneficiary information didn’t transfer for approximately 2.5% of our participants. Some of that was due to data quality. We are also finding that if a beneficiary is also a TSP participant, the system doesn’t like that. If the beneficiary is a trust, the system doesn’t like that either. But we are working to get both of those issues resolved quickly.”

So far, it seems that the mitigation efforts are working. Erin Carter, who leads the Federal Benefits Institute for the National Active and Retired Federal Employees Association, says that they are getting fewer calls from members reporting issues with the platform. “Anytime you are making a change this significant there are going to be issues,” she tells PLANSPONSOR. “But people are getting used to the changes.”

Despite these speedbumps, usability of the platform has gone up. Users can sign documents electronically and do electronic deposits and withdrawals, neither of which were possible before.

Users are also moving money into mutual funds for the first time with the new functionality. The mutual fund window provides access to approximately 5,000 mutual funds that participants can invest in. According to Weaver, 1,100 participants have moved approximately $50 million into mutual funds since the window opened on June 1. The system will also be able to respond if there are additional changes to retirement rules in the future. Congress is currently considering updates that would further extend the age after which participants would have to take required minimum distributions, for example. There are also proposals that would change the way beneficiaries access and pay taxes on accounts they inherit.

Beyond these rule changes, the new platform is likely to remain stable for now. Any additions to the fund offerings would first have to happen legislatively, and at present there are no such changes under consideration.