	Background

The Federal Employees’ Retirement System Act of 1986 (FERSA) created  TSP to provide options for retirement planning and encourage personal  retirement savings among the federal workforce. As of February 2007, TSP held approximately $210 billion in retirement  assets for 3.7 million current and former federal employees and their  families. Congress created FRTIB and has the ability to change the structure for  overseeing FRTIB. Congress requires FRTIB to submit its budget and to have an independent  financial audit each year, performed under contract by a public accounting  firm. DOL is not required to submit its audit reports directly  to Congress, and Congress has not asked DOL to share its audit findings  on a regular basis through hearings or meetings with committee staff. We recommended that  Congress consider amending FERSA to require DOL to establish a formal  process by which the Secretary of Labor can report to Congress areas of  critical concern about the actions of the Executive Director and Board  members, but no changes have yet been made. TSP’s Fiduciaries Have Similar Duties to Those of Private Plan Fiduciaries, but TSP Board Members and the Executive Director Have Special Liability Protections

FRTIB’s fiduciary duties are similar to those of private sector plan  fiduciaries, and FRTIB has adopted various policies and practices to fulfill  these responsibilities, but unlike private plan fiduciaries, Board members  and the Executive Director have special liability protections. TSP’s  authorizing statute, FERSA, and ERISA set the overarching requirements  for fiduciaries to act prudently and solely in the interest of plan  participants and beneficiaries. While the guidance is not  specifically designed for TSP, FRTIB has implemented policies and  practices for several of the areas in DOL’s guidance. TSP Fiduciaries Have Limited Discretion over Investment Policy Compared to Fiduciaries of Private Plans

The Board has less discretion than private sector plan sponsors in setting  investment policy because the investment options available to TSP  participants are largely outlined in law, whereas private sector plan  sponsors are responsible for choosing which investment options to offer  participants. FRTIB may select the particular indexes for the funds to  follow as well as review the investment options and suggest additional  funds. FRTIB and Other Federal Agencies Have Responsibility for Educating Participants on Retirement Issues, and Responsibilities Vary for Private and State and Local Government Employee Plans

FRTIB, OPM, and staff of employing federal agencies have responsibility  for educating TSP participants about their retirement plan and other  retirement issues, and responsibilities vary for private and state and local  government employee plans. Private Plan Sponsors Are Responsible for Informing Participants about Their Plans, and Responsibilities Vary for State and Local Government Employee Plan Sponsors

The Employee Retirement Income Security Act of 1974 (ERISA) requires  plan sponsors to give plan participants in writing the information they  need to know about their retirement benefit plans, including plan rules,  financial information, and documents on the operation and management  of the plan. All of the officials we spoke with provide some type of  general retirement information or non-plan-specific information to  participants, such as retirement calculators. Conclusion

Through FERSA, Congress established FRTIB to administer TSP and  charged DOL with establishing a program to carry out audits to determine  the level of TSP compliance with FERSA requirements. As the size  and complexity of TSP have grown, an appropriate level of oversight of  FRTIB is critical to ensuring that federal workers’ retirement savings are  properly managed. Agency Comments and Our Evaluation

We provided a draft of this report to the Federal Retirement Thrift  Investment Board (FRTIB), the Department of Labor (DOL), and the Office  of Personnel Management (OPM) for review and comment.
Why GAO Did This Study

The Thrift Savings Plan (TSP), a retirement savings and investment plan for federal workers, held approximately $210 billion in retirement assets for 3.7 million participants, as of February 2007. TSP is managed by the Federal Retirement Thrift Investment Board (FRTIB). In light of questions about TSP oversight, we examined (1) the current structure for overseeing FRTIB, (2) how the statutorily defined fiduciary responsibilities of FRTIB compare to the responsibilities of private plan sponsors and how FRTIB fulfills its responsibilities, (3) how FRTIB's investment policies differ from those of private plan sponsors, and (4) FRTIB's statutory responsibilities to educate plan participants about TSP and other retirement issues and how these responsibilities compare with those of private and state and local government employee plan sponsors.

What GAO Found

The Department of Labor (DOL) and Congress oversee FRTIB. In accordance with the law establishing TSP, DOL conducts regular audits to determine the level of compliance with laws and regulations as well as to ensure the efficiency and effectiveness of operations. Congress requires FRTIB to submit its annual budget and other reports, and to undergo an independent financial audit. However, Congress has not held regular FRTIB oversight hearings. Also, DOL does not submit its audit reports directly to Congress, and has not yet been provided with a mechanism to communicate issues of critical concern to Congress. FRTIB's fiduciary duties are similar to those of fiduciaries of private sector plans. To act prudently and solely in the interest of plan participants, FRTIB has implemented policies and practices in several of the areas mentioned in DOL's guidance for private sector plans. However, unlike the law governing private plans, the Federal Employees' Retirement System Act of 1986 (FERSA)--the law that governs the administration of TSP--contains special liability protections for Board members and the Executive Director. FRTIB has less discretion than private sector plan sponsors in setting investment policy because the investment options available to TSP participants are largely outlined in law, whereas private sector plan sponsors are responsible for choosing which investment options to offer participants. TSP's authorizing statute specifies the number and types of funds available to participants, and requires that some of these funds track indexes, which are broad, diversified market indicators. FRTIB chooses the particular indexes for the funds to track, reviews the investment options, and suggests additional funds. Changing TSP investment options requires legislation. FRTIB and the Office of Personnel Management (OPM) are responsible for educating participants about TSP and general retirement issues, while the private and state and local government employee plan sponsors that we interviewed are governed by different rules. By statute, FRTIB is charged with developing educational materials for participants about TSP-specific issues. FRTIB also assists OPM, which is required to provide general retirement education to federal employees and train retirement counselors at federal agencies to provide information to federal employees. Private plan sponsors as well as the state and local government employee plan sponsors that we spoke with are responsible for educating participants about their plans, but often supply general retirement information as well. As the size and complexity of TSP have grown, an appropriate level of oversight of FRTIB is critical to ensuring that federal workers' retirement savings are properly managed. GAO previously recommended that Congress consider amending FERSA to require DOL to establish a formal process by which the Secretary of Labor can report to Congress issues of critical concern about actions of the Executive Director and Board members.