Background

The Federal Employees’ Retirement System Act of 1986 (FERSA) created  the Thrift Savings Plan as one of the basic elements of a new retirement  system for federal workers to, among other purposes, provide options for  retirement planning and encourage personal retirement savings among the  federal workforce. Most federal workers are allowed to participate in  TSP, which is available to federal and postal employees, members of  Congress and congressional employees, members of the uniformed  services, and members of the judicial branch. Eligibility depends upon  coverage under the Federal Employees’ Retirement System or the Civil  Service Retirement System and civilian or military status.
Eligible federal employees are able to contribute up to a fixed percentage  of their annual base pay or a flat amount subject to IRS limits.  Additionally, certain participants are eligible for automatic 1 percent  contributions and limited matching contributions from the employing  federal agency. TSP provides federal (and in certain cases, state) income  tax deferral on employee contributions and their related earnings, similar  to those offered by many private sector 401(k)-type pension plans. As  with a 401(k) plan, participants are able to contribute a portion of their  basic salary into an individual tax-deferred account. Participants have the  ability to manage their accounts and conduct a variety of transactions  similar to those available to 401(k) participants, such as reallocating  contributions, borrowing from the account, making withdrawals, or  purchasing annuities.
Administration of TSP falls under the purview of the Federal Retirement  Thrift Investment Board, an independent agency in the executive branch  established by Congress under FERSA. This five-member, presidentially  appointed Board’s primary responsibilities include establishing policies for  the investment and management of TSP. In addition, the Board must  manage the Thrift Savings Fund solely in the interest of the participants  and beneficiaries of TSP, as well as create administrative policies for the  TSP. In addition to assigning these broad duties, FERSA also charges the  Board with appointing an Executive Director and an Employee Thrift  Advisory Council (ETAC). The Executive Director and staff are  responsible for implementing the Board’s policies and managing the day- to-day operations of TSP, prescribing regulations to administer FERSA,  and other duties. The Employee Thrift Advisory Council advises the Board  and Executive Director on matters relating to the investment and  administration of TSP.
While the Executive Director has responsibility for establishing and  maintaining TSP participant accounts, these account record-keeping  services are currently performed primarily by the U.S. Department of  Agriculture’s National Finance Center under a contractual agreement with  the Board. Through this agreement, the TSP service office of NFC is  responsible for updating participants’ accounts based on data provided by  agency payroll offices, processing participant account transactions, and  providing customer service support related to these functions.
Federal agency payroll and personnel offices also play a role in the  administration and customer service activities of TSP. These offices are  responsible for helping new employees enroll in TSP when they are hired  and assisting existing employees make changes during designated  semiannual seasons called open enrollment periods. They also retain  control of administrative functions affecting employee payroll deductions,  such as the election and alteration of contribution percentages.  Additionally, FERSA requires TSP to provide information to employees  participating in TSP and requires the Office of Personnel Management to  establish a training program for all retirement counselors of federal  agencies.

	TSP and Private Sector Plan Managers Provide a Similar Range of Customer Service Options but Emphasize Different Approaches

Though they emphasize different approaches, TSP and private sector plan  managers enable customers to select their preferred means of service from  a similar range of service options—including telephone, Internet, and on- site assistance (fig. 1). Both TSP and private plan managers give customers  the option of obtaining assistance through automated telephone systems  as well as live representatives located at call centers, although they  emphasize different standards when evaluating the assistance provided. In  addition, both TSP and private managers provide Web sites that deliver  plan information and allow participants to conduct personal transactions,  but private plan managers emphasize the use of their Web sites as the  primary vehicles for delivering retirement education and information to  participants. Finally, while both TSP and private managers use on-site  coordinators to provide plan information, this customer service function is  more heavily used by TSP. Whereas TSP managers said that agency  representatives serve as the initial contact points for actively employed  TSP participants to learn about TSP, private managers use on-site  representatives less and do so to supplement call center representatives  and Web-based resources.

		Call Centers Are Used to Provide Customer Service by Both TSP and Private Sector Plan Managers

TSP managers provide an automated, toll-free telephone system and call  center staff that help answer participants’ questions, and TSP managers  measure the efficiency of the call centers based on quantifiable standards,  such as the time it takes to respond to incoming calls. TSP’s automated  telephone system, known as the ThriftLine and operated by the National  Finance Center, allows participants to access general plan information,  including share prices, rates of return, current loan interest rates, current  annuity interest rates, and plan news. In addition to obtaining general  plan information, participants can gain access to the ThriftLine system to  get personal account information, such as their account balance and how  they are allocating their contributions, or to manage their account, such as  by making interfund transfers or withdrawals. Participants can also use  the ThriftLine system to reach a TSP call center representative.
TSP managers also maintain a call center where participants can reach  service representatives; these representatives answer participants’  questions and can also help them make changes to their accounts. About  155 call center representatives field incoming telephone calls and answer  participants’ questions about loans, allocation changes, interfund  transfers, and withdrawals. In addition to answering participants’  questions, these call center staff also register requests for assistance and  complaints in a record-keeping system, which allows supervisors or lead  analysts to review such comments and respond to participants to help  them resolve problems. Call center staff said participants most commonly  call to ask questions about loans or withdrawals. The staff also indicated  that in the past participants with loans were more likely than others to call  back seeking more help.
Recently, the Board has taken a number of steps to improve telephone  service to TSP participants. These included establishing an additional call  center to reduce service interruptions and providing toll-free telephone  service to facilitate participant access to service representatives. The new  call center, located in Cumberland, Maryland, opened in July 2004 to  complement the center located in New Orleans, Louisiana, during normal  operations and provide backup during weather-related or other local  events that could otherwise interrupt service. Also in July 2004, the Board  began providing toll-free telephone service to TSP participants where  participants will be able to obtain TSP account or transaction information  via the automated telephone service 24 hours a day, 7 days a week.
TSP managers emphasized the efficiency of call centers based on  quantifiable standards—such as the percentage of calls that are answered  within a specified time frame—and pointed to their performance on these  measures as evidence of call center productivity. For example, the TSP  call center tries to answer at least 90 percent of calls within 20 seconds of  a participant calling. TSP was meeting this standard in 2003 prior to the  implementation of the new record-keeping system and has since begun  meeting it again. However, TSP failed to meet this standard for about a  10-month period (May of 2003 through February 2004), when it was  experiencing an increase in the volume of calls received prompted by the  implementation of the new record-keeping system. Finally, TSP also  closely monitors the percentage of callers who hang up before receiving  service (known as the call abandonment rate) and the average call length  as a measure of service, and each call center representative is required to  help an average of at least 50 participants per day. TSP managers said  that resolving the participant’s concern on the first call is also a goal, and  they have enlisted the help of a private sector contractor to make changes  to improve the quality of their call center processes and are developing  new standards for call center representatives.
Private sector plan managers also provide caller assistance through  automated toll-free telephone systems and live service representatives.  Some of these managers have more than one defined contribution plan  under their management and provide unique toll-free numbers for each  plan. Participants complete a log-in process that routes them to an  automated menu unique to their particular plan—a system similar to that  provided by the ThriftLine. From this menu, participants can then check  their account balances, get price quotes, receive plan information, and  process account transactions. These automated customer service lines  also give participants the option of speaking to a live call center  representative who can provide assistance with transactions or answer  their questions. In addition to providing basic assistance, service  representatives use the call as an opportunity to direct participants to  educational and plan materials available on their Web site.
While private managers used similar means as TSP to provide caller  assistance, they emphasized different types of standards than TSP when  evaluating the success of their call centers. Private managers told us that  they downplayed the importance of quantitative measures and instead  focused on ensuring that service representatives fully satisfied each  customer’s needs efficiently and politely in one call. Specifically, private  sector managers emphasized this policy of first-call resolution as an  overriding goal and said they viewed quantitative measures, such as those  emphasized by TSP, as secondary or, in some cases, an inaccurate  measure of call center performance. For example, while TSP keeps close  watch on the call abandonment rate, private managers we spoke with  placed little emphasis on this measure. In fact, one plan manager told us  he believed the call abandonment rate to be an inaccurate measure of  productivity, as some participants terminate calls after opting to visit the  Web site in response to the telephone recording they hear while on hold.  Furthermore, unlike TSP managers, who evaluate service representative  utilization by representatives’ ability to answer a minimum number of calls  each shift, private managers we spoke with did not have required call  minimums, instead stressing that service representatives should fully  resolve each participant’s needs, regardless of the time required. Finally,  although private managers had requirements—such as answering   90 percent of calls within 20 seconds—specified in the contracts with their  clients, they did not use such measures as the primary standard for  evaluating service representatives or call center effectiveness. However,  we did not attempt to assess the possible impact of these differences on  the quality of customer service.

		Web Sites Are Provided by Both TSP and Private Plans, but Private Plan Managers Tend to Use Them for Broader Purposes

TSP managers also provide customer service through their Web-based  transaction system. TSP’s Web site is maintained and operated by TSP  staff and according to TSP managers has received an average of about   15.7 million hits per month and processed an average of 216,696  transactions per month during the first 8 months of 2004. Participants can  use the Web site for functions such as accessing plan information, making  loan requests, downloading forms, transferring funds, changing allocations  between funds, and accessing account balances, among other things.  Participants can also conduct many of these transactions over the phone,  but by using the Web site, participants can also make a loan request and  can submit the form online for quicker processing.
According to TSP managers, the Web site has to a great extent replaced  paper forms for processing transactions and providing information. For  example, 93 percent of interfund transfers were conducted through the  Web site during the first 8 months of 2004. TSP managers also said that  they have eliminated paper versions of forms, statements, and bulletins  that have traditionally been provided through the mail or sent to agency  coordinators because most of these documents can be obtained through  the Web site. TSP managers stated that their goal in doing so is to improve  their level of service while decreasing costs.
Private sector plan managers that we spoke with said that in addition to  providing a means for participants to process transactions, they also  intend their Web sites to be the primary vehicles for delivering retirement  education and information to their participants. Like TSP managers,  private managers said they allow participants to conduct different  transactions, check account balances, and receive plan information  electronically. One plan manager that we spoke with said that his Web site  processed approximately 9 million transactions per month in 2003.
In addition, we found that private sector Web sites provided a range of  resources for participants, from Web-broadcast seminars to downloadable  brochures and general investment information, and most private plan  managers underscored the importance of the Web site as a tool that allows  participants to access information on their own. One manager told us that  his goal is not only to educate participants but also to influence participant  behavior by strategically placing educational information on the Web site  so as to link such educational materials to the topic or transaction a  participant is pursuing. For example, the plan manager said that research  has found that most participants visited the site for information on their  account balance or personal rate of return, not to seek out educational  materials. In response to findings about participant Web usage, the plan  manager redesigned the site so that educational materials are embedded in  relevant pages of the site, rather than isolated on a separate page. In  contrast, TSP separates all plan and retirement information from account  and transaction access.

		Agency Coordinators Serve as the Front Line of Customer Service Operations for TSP, but Managers of Similar Private Sector Plans Rely on Such On-site Representatives Less Frequently

Designated by their federal agencies as liaisons with TSP managers,  agency coordinators provide customer service to participants within their  particular agencies. Agency coordinators, who are typically located in  their agencies’ personnel or benefits offices, are the primary contacts for  actively employed TSP participants. Generally, agency coordinators are  expected to inform eligible employees of TSP options and benefits;  maintain supplies of TSP forms and informational materials; collect,  process, and submit TSP election forms to agency payroll offices; and  respond to inquiries from active employees. For some agencies, the  coordinator’s responsibilities are combined with those of the agency  retirement counselor. FERSA authorizes agencies to designate retirement  counselors who are responsible for providing employees with benefits  information and mandates that OPM establish a training program for these  retirement counselors. Agencies, however, have primary responsibility  for designing and implementing their programs according to agency- specific needs.
TSP managers said that the coordinators are the front line of TSP’s  customer service operations. However, they also said that they lack the  authority to monitor how frequently, at what point, and for what purpose  coordinators contact participants. TSP managers view their role in  providing customer service through agency coordinators as limited  primarily to assisting these coordinators by distributing information and  answering questions as they perform their TSP-related duties. The agency  coordinators we spoke with said they were responsible for providing  information on TSP to new employees, providing employees information  on open season enrollment, conducting retirement seminars, helping with  payroll issues, and answering any questions that employees may have  about TSP.
We found that the information and assistance provided to employees by  coordinators in different agencies varied. For example, when we spoke  with nine agency coordinators from large and small agencies, three  coordinators told us that they had requested TSP staff to conduct seminars  at their agencies to provide information on TSP and retirement planning.  Of the six other coordinators that we spoke with, all but one said they  conducted their own seminars or used an outside contractor. The agency  coordinators said they also distribute information electronically or  through posted bulletins, informational meetings, orientation sessions, and  fliers in office mail. Several coordinators indicated that they refer  participants to the TSP Web site or the ThriftLine to obtain plan  information or to conduct transactions. The coordinators themselves  receive guidance and new information on TSP from TSP managers by  attending optional quarterly meetings and coordinator training sessions  that are offered monthly and reading TSP bulletins—monthly publications  that provide recent information on the TSP and are available to agency  coordinators through the TSP Web site and the mail. The agency  coordinators we spoke with indicated that they had other responsibilities  in addition to their TSP-related duties.
Private sector plan managers rely on on-site representatives less and tend  to deliver educational and transaction resources directly to participants.  As a result, plan managers view call center representatives, automated  telephone services, and Web sites as their front line of customer service  operations. This emphasis on self-service results in these managers  providing all available plan information and retirement education through  one or more of these service delivery methods and using on-site  representatives only as a backup measure or not at all. Private sector  companies have been moving away from face-to-face service delivery  approaches and toward live telephone assistance to meet consumers’  expectations for fast and convenient service and to provide this service  more cost-effectively.
Additionally, by allowing participants to conduct all transactions— including making changes to contribution percentages—through the Web  site or telephone services, plan managers also rely less on employers to  provide services. One plan manager we spoke with described the use of  on-site representatives as flawed, because information provided by  different on-site representatives may vary. By providing all information  through a Web site or centralized contact center, the manager told us, the  plan could ensure consistency of service. Despite this, some plan  managers we spoke with did use on-site representatives in a limited  capacity. One plan manager provided limited on-site support for its state  government and school district clients, but the arrangement was specific  to the plan sponsor and the plan manager did not have a companywide  practice for utilizing such representatives. Specifically, the number,  location, and function of representatives provided to a client varied from  plan sponsor to plan sponsor. For its state government and school district  clients, the plan manager only provided on-site service when the plan  sponsor specifically requested a representative or during specified times,  such as open enrollment periods.

	Private Sector Plan Managers Have Adopted Various Practices That TSP Managers Could Consider to Improve Customer Service

Private sector plan managers we contacted have adopted various other  practices that are not featured within TSP, such as regularly assessing  customer satisfaction and using regularly updated technology to improve  customer service. Private managers frequently assess their performance  by gathering participant feedback on the services provided and use this  information to improve their customer service delivery. Although TSP  managers have surveyed participants, they have not done so since the  early 1990s and currently have no systematic approach to assess whether  the plans customer service meets participants’ needs. In addition, private  managers that we spoke with appear to utilize more up-to-date  technologies to provide customer service than do TSP managers.

		Private Sector Plan Managers Frequently Assess Their Performance by Gathering Participant Feedback on the Services Provided

Private sector plan managers regularly gather participant feedback and  use the feedback received to improve their customer service. Since most  private plan managers deliver customer service through multiple methods,  they use a number of mechanisms to gather participant feedback. These  mechanisms are customized to gather information specific to the service  method the participant used. For example, some plan managers we spoke  with provide a link on their Web site to a survey that allows participants to  share their impressions of and experiences with the service provided  through the site. Some managers also use short on-the-spot surveys to  gather feedback about a participant’s experience on the plan manager’s  Web site.
These plan managers also survey participants after they have interacted  with the plan’s contact center and voice response telephone system  through short, automated surveys at the end of a call. Managing officials  told us that these surveys include questions regarding the service method’s  ease of use, whether or not the participant was able to complete the  intended transaction, and sometimes ask whether the participant has  suggestions as to how the service method or transaction process could be  improved. Traditional survey methods are also used, such as an annual  mail or telephone survey to randomly sample participants and assess their  overall level of satisfaction with the services provided. However, plan  managers said that these surveys take longer and are more costly to  administer than other methods.
All of the plan managers we spoke with emphasized the importance of  incorporating participant feedback into their customer service delivery  models in order to better meet the needs of their participants. They told us  that it is important to determine what is working and what is not by  regularly gathering participant feedback. For example, one plan manager  told us that his plan had been mailing participant statements to the  employer for distribution for several years. He thought that this method of  distribution would be more convenient and cost-effective for the plan and  that since no participants were complaining, it must be working  efficiently. However, when participants were surveyed, they made it  known that the statements were usually not distributed by their employer  in a timely manner, if at all, and as a result, statements are now mailed  directly to participants. Another plan manager said that his plan had  redesigned its entire Web site and added features based primarily on  feedback from their participants.
TSP managers said that they have not surveyed participants since the early  1990s because they were waiting for a new record-keeping system to be  developed, and they said it would not have made sense to survey  participants until after the transition issues were resolved and participants  had some experience under the new system. Rather than survey  participants shortly after the new system was implemented, in 2003, TSP  managers have since decided to wait until a new investment option is  added to the existing selection of five funds. The Board anticipates  implementing the new option in mid-2005. Although the Board has a  system for addressing participant complaints, TSP has no systematic  mechanism in place for soliciting participant views about the quality of the  service they are receiving. Instead, TSP managers rely largely on indirect  feedback from NFC and TSP staff and others, such as agency  coordinators, who respond to complaints or requests for assistance from  participants. Agency coordinators and the call center representatives at  NFC provide some feedback to TSP managers regarding areas of potential  improvement. TSP managers are also responsible for gathering participant  feedback through the Employee Thrift Advisory Council, as required by  FERSA. However, while some ETAC representatives provide TSP  managers with feedback on draft TSP publications, legislative initiatives,  and other issues, ETAC representatives do not systemically solicit  feedback from their constituents. Some ETAC representatives may receive  sporadic feedback from participants, but ETAC does not conduct surveys  of plan participants. As a result, TSP managers are dependent on call  center representatives or agency coordinators to forward any feedback  they receive from participants. Also, the executive director of ETAC said  that TSP participants might be more likely to raise customer service issues  with their local representatives, such as union representatives, rather than  elevate issues to the national level. Therefore, the extent to which  participants within the represented agencies and employee organizations  provide feedback to their ETAC representative is unclear.
Because TSP relies on customer complaints as an indicator of participant  satisfaction, its managers do not have the information necessary to  determine the degree to which participants are satisfied with the services.  A TSP official said that because participant complaints have decreased  significantly and leveled off since the record-keeping system conversion in  June 2003, participants are probably satisfied with the services that TSP is  providing. However, TSP managers’ reliance on complaints does not take  into account participants who are dissatisfied and have not complained or  do not know where to complain about the services they received. In other  instances, participants have to send letters to TSP managers or the TSP  call center, or contact their member of Congress with problems or  concerns they have had with the services they received.

		Privately Managed Plans Use More Up-to-date Technology in Delivering Customer Service than TSP Does

Private sector plan managers that we spoke with also utilize more up-to- date technologies to improve customer service than TSP does. We found  that the privately managed plans’ Web sites provided participants more  flexibility and options for managing and learning about their retirement  accounts than did the TSP Web site. Private plan managers also told us  that one part of providing the best possible customer service is allowing  participants to serve themselves in an easy and convenient manner, and  they have found that the more up-to-date technology that they have  incorporated into their customer service delivery models helps facilitate  participant self-service. For example, one plan manager’s Web site allowed  participants to instantly create and print account statements for any  period of time. This allows participants to easily determine how much they  earned, lost, or contributed for any given period of time. Plan managers  said that such information helps participants make decisions about how to  allocate their funds and about retirement planning. Conversely, the TSP  Web site only makes statements available for calendar year quarters, and  the participant must wait approximately 2 weeks after the close of the  quarter to obtain the statement.
Privately managed plans also use their Web sites to help participants  understand their retirement plan and the options available to them within  the plan. For example, one plan manager we spoke with provided access  to prerecorded seminars on the Web sites that cover current account- related topics and features. Participants may view these seminars at any  time as an alternative to the printed literature that was also available  through the Web site if desired. Conversely, the TSP Web site only offers  print copies of its general plan information brochure, available in hard  copy or for viewing online, and the brochure on general plan information  has not been updated since mid-2001.
The private plan managers that we spoke with also utilized more  sophisticated calculators on their Web sites than does TSP. For example,  one plan manager’s Web site provided a calculator that would project a  participant’s account balance given certain hypothetical parameters, such  as number of years before retirement, that the participant can select. The  calculator is securely linked to the participant’s account, and certain  items, such as the participant’s account balance and historical rate of  return on assets, are automatically entered into the calculator, simplifying  the process for the participant. TSP also offers an account projection  calculator, but the calculators they offer are not on a secure server and all  parameters must be specified manually, and the participant may not know  what assumptions, like the estimated rate of return, are reasonable to  specify. The plan managers that we spoke with told us that participants  are more likely to use and benefit from tools such as the retirement  income projector if they are convenient and easy to use.
All of the private plan managers that we spoke with emphasized the  importance of keeping abreast of the latest technology and industry trends  in order to provide participants with the highest possible level of customer  service. For example, two plan managers told us that they regularly and  systematically review not only their competitors’ Web sites for new ideas  and innovations, but they also study the Web sites of other companies,  such as Yahoo and Amazon, to keep abreast of the latest technological  developments. Because TSP managers are not taking full advantage of  such technology, TSP participants may not receive the benefits it offers.  As plan managers have continually updated their Web sites to incorporate  more sophisticated features, they have simultaneously experienced  increased Web usage and decreased calls to service representatives by  participants. Another manager stated that certain Web features could  reduce mailing costs by allowing plan managers to provide some  information electronically.
Although TSP managers have a simple and functional Web site available  for participant use, the site does not offer the flexibility and convenience  of the Web sites provided by the private plan managers that we reviewed.  Although TSP managers told us that they have recently taken steps to  learn about industry innovations—including talking to and occasionally  visiting private sector plan managers, viewing private sector Web sites,  and reviewing the literature from researchers in the field, they have not yet  institutionalized the routine collection of information to regularly and  systematically assess trends and innovations in the defined contribution  industry.

	Conclusions

TSP has become one of the largest retirement savings plans in the United  States, and it must provide customer support and record keeping for  millions of participants across many federal agencies throughout the  United States and, in some instances, the world. TSP must exchange  information with multiple federal agency payroll, personnel, and data- processing representatives and handle millions of participant transactions  every month. In addition, TSP relies on other federal agencies to provide  participants’ benefit information, including educational and other  information, on TSP. Because these characteristics make TSP unique, its  approach to customer service is naturally somewhat different from that of  other pension plans. Nonetheless, some aspects of private sector practices  seem appropriate for TSP managers to consider. For example, as TSP  managers continue to modernize their customer service operations, they  should look for opportunities to use participant feedback to identify  broader innovations to improve their services, in addition to focusing on  individual participants’ specific concerns. The practices of private sector  plan managers suggest that direct, ongoing participant feedback is  invaluable in responding to the changing needs of plan participants.  Without obtaining more frequent and representative feedback from  participants, TSP managers cannot determine what improvements would  best satisfy participants’ needs.
While recognizing the recent improvements made to TSP’s customer  service—such as the new record-keeping system, the additional call  center, and toll-free telephone service—we conclude that TSP could  benefit from additional measures that could enhance customer service  further. For example, the innovative, technological, and operational  practices that have become commonplace in the private sector customer  service industry might be means to continual customer service  improvements at TSP. Also, TSP could benefit from regular and sustained  examination of private sector customer service practices. As TSP  participants become more familiar with online financial transactions and  the services provided by private plan managers, participants may come to  expect services not currently provided by TSP. However, the costs of  making changes to TSP’s services would have to be balanced against the  potential benefits such changes could provide to participants and the  plans themselves.

	Recommendations for Executive Action

To help ensure that federal workers have the options needed to effectively  plan and to encourage them to save for retirement, TSP managers should  continually seek new ways to improve their customer service operations.  Both the potential costs and benefits should be weighed in making  decisions about changes to service. Therefore, we recommend that the  Federal Retirement Thrift Investment Board direct the Executive Director  to take the following actions:    Develop and implement an evaluation effort to systematically assess the  level of customer satisfaction and to identify, as needed, areas of potential  improvement for the ThriftLine, caller assistance center, Web-based  transaction system, and TSP coordinator program. It should consider a  variety of different approaches, including traditional methods such as  surveying participants annually through the mail or telephone to assess  their overall level of satisfaction with the services provided, supplemented  by other approaches, such as exploring the use of Web-based and  automated telephone call evaluation tools to randomly survey TSP  participants.
Institutionalize the routine collection of information from the largest  private sector plan managers to keep up with current industry trends and  assess whether the new and existing practices used by private managers  would prove advantageous and cost-effective to TSP.

	Agency Comments and Our Evaluation

We obtained written comments on a draft of this report from the Federal  Retirement Thrift Investment Board and made changes to the report as  appropriate. The full text of these comments is reproduced in appendix II.  In response to the Board’s comments, we added information regarding its  plans for surveying participants. We also added information regarding the  Board’s recent announcements that it will review the service provided by  private plan managers. The Department of Labor was also provided a draft  of this report for review and advised us that it had no comments.
In its written comments, the Board disagreed with our recommendation  regarding the implementation of an evaluation effort to assess the level of  customer satisfaction. The Board stated that our recommendation was  moot because the Board had previously announced its intention to survey  TSP participants on a variety of topics, including client satisfaction.  However, in its February 2004 monthly meeting, the Board said that such a  survey would not be conducted for at least another 2 years. As we state in  our report, the private sector plan managers that we spoke with believe  that direct, ongoing participant feedback is needed to respond to the  changing needs of plan participants. Without obtaining more frequent  feedback from participants, TSP managers cannot determine what  improvements would best satisfy participants’ needs. The Board also  suggested that certain aspects of plan performance indicate increased  participant satisfaction. In particular, the board stated that TSP’s high  participation rate, increased number of transactions, and low account  withdrawal rate among inactive participants, such as retirees or former  employees, imply a high level of participant satisfaction. Although such  performance measures provide an indication of participant satisfaction,  more sophisticated efforts, such as participant surveys, are needed to  provide direct information on the changing needs of plan participants and  what improvements would best satisfy those needs. We recognize that  these efforts may require substantial resources, which is why other means,  such as exploring the use of Web-based and automated telephone call  evaluation tools to randomly survey TSP participants, are needed as  supplementary efforts. Without a systematic effort to obtain feedback  from participants, the Board is not in the best position to determine  participant satisfaction.
The Board also disagreed with our recommendation that it should  routinely solicit information from the largest private plan managers to  assess whether their practices would be advantageous and cost-effective if  adopted by TSP. The Board said that it has conducted and will continue to  conduct on-site reviews of the largest private plan managers to determine  the services they provide and the technological capabilities they plan for  the future. While the Board’s recent visits to such plan managers are a  positive step, we believe that a routine and systematic effort to survey  practices used in the private sector customer service industry should be  institutionalized as a regular aspect of TSP’s operations. Further, in  considering which new practices to adopt, the Board would need to weigh  the costs of making changes to TSP’s services against the potential  benefits to participants and the plans themselves. Conducting such cost/  benefit analyses is a management function and would be inappropriate for  GAO to initiate.
The Board suggested that the section of our report on customer service  options questions the federal government’s reliance on agency retirement  counselors for the delivery of TSP information and service. This section of  the report was descriptive, illustrating the different ways in which private  sector entities and TSP managers provide customer service. While we  noted that some federal agencies use on-site coordinators, we observed  that, in general, the private sector tended to rely less on coordinators and  more on call center representatives, automated telephone services, and  Web sites to deliver informational and transactional resources to the  participants. The Board stated that it rejects the suggestion that the focus  of retirement education be shifted away from retirement counselors. We  are not suggesting that the agencies move away from retirement  counselors, but we emphasize that providing retirement information  through the use of retirement counselors does not preempt TSP managers  from also providing such information through call centers and Web sites.
The Board questioned the feasibility and value of implementing several  customer service features used as examples in the draft report. For  example, we included a discussion about a private sector Web site that  could display a graph of the projected growth rate of a participant’s  account at the current contribution rate as well as at a slightly higher  hypothetical rate to demonstrate the effect of higher contributions. This  example was used only to illustrate the type of educational features used  by the private sector and was not necessarily intended as a specific  recommendation to be implemented. However, we maintain that the  private sector offers a range of Web features, particularly those  concerning education and retirement information, that are not available to  TSP participants. Similarly, other examples, including on-the-spot  participant surveys and more flexible options for statement preparation,  were intended to illustrate the types of advanced tools private sector plan  managers provide to their participants rather than as specific  recommendations to be implemented.
The Board also stated that the draft ignored TSP’s superior performance  results as measured by key standards that demonstrate that TSP  significantly outperforms the private sector. In response, we noted that  TSP had generally met its standard for call center performance  measurement, such as the percentage of all calls answered within   20 seconds, except for a period of about 10 months of increased caller  volume as the Board implemented its new record-keeping system.  However, as presented in the draft, private managers told us that they  downplayed the importance of quantitative measures and instead focused  on ensuring that service representatives fully satisfied each customer’s  needs efficiently and politely in one call. Specifically, private sector  managers emphasized this policy of first-call resolution as an overriding  goal and viewed the quantitative measures, such as those emphasized by  TSP, as secondary or, in some cases, an inaccurate measure of call center  performance.
Finally, the Board stated that the draft failed to address three of the five  areas of interest to the committee. At the conclusion of the design phase of  our study, GAO and the committee staff agreed to the objectives stated at  the beginning of this report. We eliminated the other areas of interest  largely because they overlapped with the scope of an ongoing audit by the  Department of Labor of TSP’s customer service.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after its  issue date. At that time, we will send copies of this report to the Secretary  of Labor, the Federal Retirement Thrift Investment Board, appropriate  congressional committees, and other interested parties. In addition, we  will make copies of this report available at no charge on GAO’s Web site at  http://www.gao.gov/.
If you have any questions concerning this report, please contact me at  (202) 512-7215 or Tamara Cross at (202) 512-4890. Other major  contributors include Daniel Alspaugh, Amy Buck, Richard Burkard, Erin  Daugherty, Malcolm Drewery, Michael Morris, Corinna Nicolaou, and  Roger Thomas.

Appendix I: Scope and Methodology

To describe how Thrift Savings Plan (TSP) managers provide customer  service, we interviewed TSP managers at the Federal Retirement Thrift  Investment Board headquarters in Washington, D.C., and officials at the  Department of Agriculture’s National Finance Center (NFC), which has  been the major contractor for account maintenance and participant  support since TSP began operations in 1987. In addition, we reviewed  documentation governing TSP’s customer service operations, attended  monthly Board meetings, and interviewed officials at the Department of  Labor and the Employee Thrift Advisory Council (ETAC). Specifically, to  describe the customer service operations of the ThriftLine and call center,  we also observed center operations at the NFC in New Orleans, Louisiana,  including customer service representatives taking telephone calls from  TSP participants; we also collected and reviewed information on the  number of calls made to the ThriftLine, the percentage of calls answered  within specified time frames, and the number and duration of calls  referred to a customer service representative. To describe the customer  service operation of the TSP Web site, we also observed and documented  the information and features available on the Web site through our  personal computers at GAO and obtained information from TSP managers  on the number of visits made and transactions conducted over the TSP  Web site. We also interviewed TSP managers and NFC officials regarding  the reliability of their call center or Web site data, such as the number of  calls received or the number of interfund transfers transacted through the  Web site. However, they were unable to provide information about any  reliability tests that might have been performed. Call center and Web site  data are presented here for illustrative purposes. Because these data are  not central to the findings, conclusions, or recommendations of this report  we did not assess their reliability. To describe the role of the agency  coordinator, we also interviewed nine TSP coordinators, selected on the  basis of a nonrandom sample of federal agencies with 5,000 or more  employees (U.S. Postal Service, Department of Defense, Social Security  Administration, and General Services Administration) and federal agencies  with fewer than 5,000 employees (Government Accountability Office,  Federal Trade Commission, Office of Personnel Management, Small  Business Administration, and the Railroad Retirement Board). We also  reviewed the Federal Employees’ Retirement System Act and Department  of Labor guidance on responsibilities of the federal agencies participating  in TSP.
To describe how private sector plan managers provide customer service  through call center representatives, automated telephone systems, Web  sites, and on-site representatives, we visited managers of other large  defined contribution plans, conducted interviews, observed their customer  service operations, and in some cases obtained documentation on their  operations. Specifically regarding private call center representatives and  automated telephone systems, we obtained information regarding their  customer service philosophies, use of call center benchmarks, call center  staff training and evaluation policies, call center technology, and call  volume management. In some cases, we obtained call center  representative training manuals and call center statistics. We also listened  to live calls with call center representatives and observed the software  tools used by these representatives to assist callers at some of the plan  managers that we visited. We also observed their Web site pages and  features, such as their retirement calculators and education materials and  discussed how often they update their Web sites and how they determine  what to include on their sites with management and information  technology specialists.
To identify customer service practices used by private sector plan  managers that TSP managers could consider to improve its services, we  also obtained copies of both online and printed customer service-related  survey instruments and, in some cases, survey results, and discussed with  plan managers how they used this information to determine what changes  would be made to their customer service delivery.
To select managers of similar defined contribution plans for comparison,  we selected 4 of the top 10 private sector plan managers and 1 of the top   3 state and local government agency plans based on total plan assets under  management as of December 31, 2002, as reported by Pensions &  Investments and Plan Sponsor Magazine. The five plan managers that we  spoke with had an average of $169.8 billion under management and  serviced an average of 4.8 million participants. They ranged in size from  $9.8 billion to $282.0 billion under management and from 150,000 to 10.3  million participants. We also spoke with private and public pension  industry groups such as the Profit Sharing Council of America and the  National Association of Government Defined Contribution Administrators  about our selection methods.

Appendix II: Comments from the Federal Retirement Thrift Investment Board

Summary:
Why GAO Did This Study

Intended to resemble private sector 401(k) pension plans, the federal government's Thrift Savings Plan (TSP) held more than $128 billion in retirement assets for over 3 million participants at the end of 2003. Customer service-related difficulties during the Federal Retirement Thrift Investment Board's (TSP's governing body) record-keeping system conversion in 2003 led the Chairman of a Senate Committee to ask GAO to examine the customer service provided to TSP participants. This review describes (1) customer service provisions within TSP and those offered by private sector managers and (2) customer service practices used by private sector plan managers that could be considered for use in TSP.

What GAO Found

TSP managers and private managers (servicing multiple pension plans) enable participants to select their preferred means of customer service from a similar range of options--such as telephone, Web sites, and on-site representatives--but each emphasizes different approaches. Both TSP and private plan managers provide customer service through automated telephone assistance as well as live representatives located at call centers. Both TSP and private managers also use standards to measure the efficiency and effectiveness of their call centers. However, TSP managers emphasize the efficiency of call centers based on quantifiable standards, such as the time it takes to respond to incoming calls, while private plan managers place a greater emphasis on the policy of satisfying each customer's needs in one call. Both TSP and private sector plan managers also use Web sites to deliver plan information and allow participants to conduct personal transactions, and private plan managers emphasize the use of their Web sites as the primary vehicles for delivering retirement education and information to participants. Finally, while TSP managers said that agency representatives serve as the initial contact points for TSP employees to learn about TSP and receive counseling, private plan managers use on-site representatives less to supplement services provided by call center representatives and Web-based resources. Private sector plan managers we contacted have adopted various other practices that are not featured within TSP, such as regularly assessing customer satisfaction and using regularly updated technology to improve customer service. These managers gather participant feedback on their voice response system via short, automated surveys at the end of participants' calls and use short, on-the-spot surveys to gather information on participants' experience with their Web site. These plan managers emphasized the importance of incorporating participant feedback into their customer service delivery model in order to better meet the needs of their participants. Although TSP managers have surveyed participants in the past, they do not have a systematic approach to assess whether their customer service meets participants' needs. TSP managers rely largely on indirect feedback from customer service staff, agency coordinators, and others who respond to complaints or requests for assistance from participants. The privately managed plans we studied also appear to utilize more up-to-date technologies to provide customer service, such as allowing participants to create account statements for any period of time or offering seminars over the Web on different plan topics that participants can access anytime. The TSP Web site provides fewer options and relies more on basic features.