Glitches Delay New Savings Plan for Federal Workersgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Glitches Delay New Savings Plan for Federal Workers By Stephen Barr Washington Post Staff Writer Tuesday, June 13, 2000; 1:00 PM
Numerous software defects will delay the launch of a new record-keeping system for the retirement savings plan used by 2.5 million current and former federal employees, the Federal Retirement Thrift Investment Board announced this morning.
The new record-keeping system had been scheduled to start Oct. 1 and would have allowed the 401(k)-type stock investment program, known as the Thrift Savings Plan (TSP), to offer two new investment opportunities.
The new system also would have allowed TSP participants to shift their savings among investment plans on a daily basis. Currently, TSP allows only one transfer of funds per month. The government, as an employer, matches contributions to TSP made by workers in the Federal Employees Retirement System.
The announcement will likely disappoint many federal employees, who have poured $62.9 billion into the TSP's C Fund, a stock index that usually follows the ups and downs of Wall Street. Many of them have expressed interest in gaining the opportunity to invest in a broader array of stock plans.
Overall, TSP assets total about $96 billion, making it one of the nation's largest pension funds.
Roger W. Mehle, executive director of the thrift board, said TSP will not set a new deadline for converting to the new record-keeping system.
"Although the board's contractor has suggested a spring 2001 implementation, it would be premature, given previous missed commitments, to set a new date until the contractor completes testing of the system and reports that all significant software defects have been fixed," Mehle said.
The new system is being developed by American Management Systems Inc. of Fairfax. When the thrift board awarded the contract in May 1997, officials said the new system would start operating in May of this year. Because of testing delays, the schedule was moved back to this October.
But the thrift board, in a statement, said that the contractor determined last week that in light of current and anticipated software defects, the Oct. 1 implementation date would involve significant risks and perhaps prevent successful operation of the new system.
The new system, when operating, will permit TSP participants to invest in two new plans, the Small Capitalization Stock Index Investment Fund and the International Stock Index Investment Fund. TSP currently offers three investment options: the C Fund stock index fund, the F Fund bond index and the G fund, for investments in government securities.
The delay will not prevent TSP from carrying out its primary operations. Mehle said the current computer system "can remain operational indefinitely."
-- Martin Thompson (email@example.com), June 13, 2000