Bureaucratus column: The TSP board's lack of accountability should be remedied
A recent General Accounting Office report found that the Labor Department does not have the tools to adequately oversee the activities of the Federal Retirement Thrift Investment Board, which manages the government's Thrift Savings Plan. If ever there was a group that needs oversight, it is the board.
Labor is charged under the Federal Employees' Retirement System Act of 1986 (FERSA) with establishing an audit program of the TSP and its operations. The audit program is designed to ensure that TSP assets have been reasonably safeguarded and that appropriate steps have been taken by TSP fiduciaries to comply with FERSA.
You have to look far and wide to find someone who is happy with the performance of the TSP board so I am glad that Labor can audit its activities. But there is a problem.
Under FERSA, if Labor finds that the executive director or board members have breached their fiduciary responsibilities, it cannot take legal action or impose monetary penalties on the executive director and board members. (The chairman and board members are appointed to four-year terms; the board appoints the executive director.)
Labor officials exercise their authority over the board through recommendations developed in the agency's audit program, which is contracted to a public accounting firm. Although, the board is not required to follow Labor's recommendations, it has implemented roughly 95 percent of them, with the majority of the remaining recommendations scheduled for implementation in 2003.
However, Labor has raised issues of concern to the board that the board has not resolved. In those instances, there is no formal process with which to ensure that the board is held accountable for its actions.
For example, Labor officials recently expressed strong concerns about actions taken by the executive director and board members to pursue a lawsuit against the company originally contracted to upgrade the TSP recordkeeping system. In response, the executive director and board members took issue with Labor's authority to question the board's actions and continued to pursue the litigation.
GAO agrees with Labor. Its report says that "Congress should consider amending FERSA to require [Labor] to establish a formal process by which the secretary of Labor can report to the Congress issues of critical concern associated with the actions of the executive director and TSP board members."
The board chairman had no choice but to agree: "While it is critical that the independence of the board and the obligation of the fiduciaries to act solely in the interest of plan participants and beneficiaries not be in any way reduced, opening the [Labor] audit process to even more oversight in no way jeopardizes these imperatives."
I think the chairman had to swallow hard before signing his letter. But the board's lack of accountability should be remedied.
Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at firstname.lastname@example.org.