Thrift Savings Plan Executive Director Gregory Long said the plan needs to incease its budget to make infrastructure changes and to hire staff. (Tom Brown / Staff)
The Thrift Savings Plan’s executive director Monday said the plan needs to increase its budget 77 percent by fiscal 2017 to make sorely needed infrastructure changes and hire new staff.
Gregory Long told the Federal Retirement Thrift Investment Board that its budget needs to increase from $143.1 million today to $253.4 million in 2017.
The bulk of Long’s proposed increases would come in fiscal 2013 and fiscal 2014. Long wants to increase the budget 33 percent next year — primarily to pay for a staffing increase — and 17 percent more in 2014. About $10 million of 2014’s proposed $33 million budget increase would pay for a new mainframe. TSP bought its current mainframe in 2007, and it will become outdated after 2013.
Staffing at the TSP would nearly double over the next year, from roughly 100 employees to nearly 200, according to a chart presented to the board. Staffing would increase slightly in 2014 to just over 200, and stay about constant through 2017. Long did not say exactly who the board plans to hire over the next year.
And TSP expects participation to explode over the next five years as many current employees retire, new employees are hired to replace them, and military service members increasingly enroll in the plan. There are currently 4.5 million TSP participants, and Long said participation could top 7.5 million in 2017.
TSP also expects the total fund balance to roughly double over the next five years, from about $300 billion today to $600 billion in 2017.
“In the past, I think we’ve made some decisions to seek lower costs at the expense of developing capabilities,” Long said. “And that is unwise. We’re trying to strike a better balance in that regard.”
Long last summer clashed with former board chairman Andrew Saul over a proposed 12 percent budget increase for fiscal 2012. The board balked at Long’s desired $147.2 million, but eventually passed an 8.5 percent increase for 2012.
Last year Long said that several new TSP enhancements — such as automatic enrollment of new federal employees and a new, highly complex Roth option — are stretching TSP’s resources thin.
Long on Monday urged current chairman Michael Kennedy and the other board members to increase spending over the next few years. If spending stays flat or only slightly increases, Long said, TSP will be forced to rely on outdated technology, face delays in meeting its strategic goals, and will not be able to create innovative programs.
“If we don’t pursue this, there are risks,” Long said. “We have an opportunity to get smarter about the plan, and help us make better decisions.”
TSP officials also disclosed that the plan’s stock-based funds took a significant hit in May, as the European financial crisis dragged down stocks around the world. The I Fund’s international stocks were hardest-hit last month, and dropped 11.4 percent. But the domestic C and S funds also declined about 6 percent and 6.9 percent, respectively.
Tracey Ray, the board’s chief investment officer, said May ended with “horrible numbers.” She said stock funds have bounced back slightly this month so far, with the C Fund regaining 2 percent of its value, the S Fund up 0.5 percent, and the I Fund increasing 3.7 percent.
The declines prompted participants to move nearly $1.6 billion out of the stock and L, or lifecycle, funds and into the safer G and F funds. The G Fund is backed by government securities and never declines in value, and the F Fund is backed by bonds.