How FRTIB wants to improve service to Thrift Savings Plan investors

Tom Temin: Ms. Tosini, good to have you on.

Suzanne Tosini: It’s a pleasure to be here, especially during Public Service Recognition Week. I’m happy to come and talk about the TSP.

Tom Temin: All right, so you have several participant outcomes planned for this new strategic plan. Give us the background on the plan formation, and what you hope to achieve overall.

Suzanne Tosini: We started formulating this plan about 18 months ago. It’s really important to think about a number of things as we’re putting together the plan. So we spend some time looking at our current state, where we are, where the FRTIB is and the TSP, where we want to be. We looked at industry trends, and had some experts come in and talk about the future of the industry. And we also wanted to make sure that we use our entire staff. Our staff has a lot of expertise in different areas of the plan. So we did a lot of surveying of our own staff as well. So both internal and external to put together the plan. And the plan really defines our vision for the future, our beliefs on how we operate and our organizational culture. And it informs our participants and our stakeholders about where we’re going to concentrate our efforts and direct our resources over the next five years. As you mentioned, this is a new plan. This is the third we’ve put together and this will be leading us through 2026.

Tom Temin: All right, and looking at the participant outcomes, which I think our listeners are concerned with mainly, objective A1: enable improved participant decision-making by providing customized information. That sounds like you’re getting more fine grained in the portal and the access to an individual TSP.

Suzanne Tosini: Yes, we are. As you see from our plan, our primary goal is to improve participant retirement outcomes. We really want to make sure that what we are presenting and what we are providing to our participants gives them the best shot at retiring with dignity, and having a good solid retirement. So we look at a number of different pieces along that. One is to improve decision-making for our participants. So where are they in their lifecycle, what’s their risk tolerance, we will be adding other features in the future to help even fine tune that. In the past, very recently, we’ve also been trying to make sure that we are targeting people to take specific actions that will improve their outcomes. For instance, last year, we introduced a new program to help people with catch-up contributions. We were seeing that some people were getting catch up contributions, those over 55. But they were not doing their full match. So we had very targeted communications to them to make sure that they got their full match before they did their catch up contributions. Because otherwise you’re sort of leaving money on the table. We’re going to be continuing doing that through the next few years.

Tom Temin: All right and one other one I wanted to ask you about is to your outreach to increase the percentage of participants that are taking targeted action. What does that mean?

Suzanne Tosini: It’s a similar type of outreach, we have some participants who are not giving the full match. So we’re targeting them with helping them understand why and the benefits to doing that. Remember, if you put in 5%, you’re gonna get your full agency match, and putting in anything less than that you’re leaving your agency’s contributions out of your retirement. So we want to make sure that people are using the TSP to its fullest.

Tom Temin: I get the impression that it is your impression that there is much more available to the average federal employee than that average federal employee actually takes advantage of.

Suzanne Tosini: I believe that is true. I think we have a group of very involved and knowledgeable participants who get on the website frequently, who do our trainings, and then we have some who don’t log in at all. And there is a value to not trading in and out. But we do want people to be aware of their portfolios, making sure that it’s diversified and that they are contributing their maximums. So we look to the next strategic plan to do more outreach to people to get them more educated, making sure they’re making really good decisions. We have a wealth of information on the website, different webinars, that is one thing that COVID has done is we have even more online and really easily accessible to anybody. And we want to make sure that people and our participants are well aware of that and they’re taking advantage of all the stuff that we have to offer.

Tom Temin: We’re speaking with Suzanne Tosini. She’s chief operating officer of the Federal Retirement Thrift Investment Board. And it looks like there’s going to be some new actual investment options, also. I’m looking at the idea of launching a mutual fund window.

Suzanne Tosini: Correct. As you may see, we are actually doing some enhancements that are going to go live. We call it Converge – inside baseball, but we call it Converge – that’s going to go live right at the beginning of June. And one of the enhancements that we will be introducing is a mutual fund window. And with this program participants, there are some requirements, but in general, participants can take up to 25% of their TSP funds and invest it through a mutual fund window. And the idea here is, of course, we at the TSP think we have the best funds ever, we think we have low cost funds, we think our lifecycle funds are appropriate for the vast majority of our participants. But there are some people who want very, very specific investments, whatever that may be, and we want to give them the opportunity to be able to invest that way. So through the mutual fund window, our participants will have access to thousands of funds, and we’ll be able to choose the ones that fit into their portfolio or their desires in terms of investments.

Tom Temin: But no Bitcoin window in the offing yet, right?

Suzanne Tosini: We don’t have a Bitcoin window. I can’t say for sure whether there’s a Bitcoin fund. Our goal with the mutual fund window is to make sure that our participants have the maximum flexibility in terms of choosing their funds, and that the funds that are on the platform are the lowest share cost funds in each family. So for instance, sometimes there are five different share classes for a specific fund. And we require that the fund on the mutual fund window for our participants is the lowest cost one, that has always been a focus of the TSP, make sure we have low costs, because every dollar that a participant saves in fees is another dollar that is compounding and earning returns for their retirement.

Tom Temin: And I also wanted to ask you about the idea of using new methods and means to make sure you understand what it is that participants want, enhancements they might want. How will you be going about that?

Suzanne Tosini: So we do a lot of outreach and a lot of surveying. In fact, we have a survey out right now to find out what people would like to see. And if you’re listening and you got that survey, please do respond and send it back to us. For instance, when we had done that survey, what we had heard over and over again, is that retirees want more options for withdrawals. Our legislation prevented us from being flexible on employee and retiree withdrawals. And we were able to get Congress to give us a law that would let us change that. And so that was a big win for us. So we go out and we survey, we do focus groups. You’ll also see on the website, that there are lots of places where people can get feedback, and either about the website itself or about other things. And we look at those every day, every week we analyze to see what our participants are looking for.

Tom Temin: And just briefly, what discretion does the board have versus what you have to go to Congress to get permission to do? For example, there was a brouhaha over Chinese or Russian investment funds, how wide is your discretion?

Suzanne Tosini: So the legislation that established the TSP was very specific in terms of trying to keep political influence out of the decisions. Our legislation says that we are to offer specific funds that are tied to well-established indexes. So it’s very, very specific. And in fact, when we wanted to introduce different funds, like an international fund, we had to go to Congress to ask for permission, to even offer an international fund. So we are very, very specific on the funds. We have flexibility more on the “how we do things” such as introducing a mutual fund window or having a really good website, those types of operational things we have lots of flexibility on.

Tom Temin: And have you noticed, just topically, an increase in the tempo of activity just because the stock market has been so volatile lately?

Suzanne Tosini: We always have some participants trading in and out given how the market is moving. But the vast majority of our participants find their funds that they are comfortable with and hold which we think is the right strategy in general.

Tom Temin: I guess TSP day trading might be the most specialized activity there is?

Suzanne Tosini: Yeah, we don’t see a lot of that, thank goodness. And we do have restrictions on the number of times you can do that per month, just because of that.

Tom Temin: Suzanne Tosini is chief operating officer of the Federal Retirement Thrift Investment Board. Thanks so much for joining me.

Suzanne Tosini: My pleasure. Thank you.