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54–697 PDF 2009

MANAGING THE THRIFT SAVINGS PLAN TO

THRIVE

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

POSTAL SERVICE, AND THE DISTRICT

OF COLUMBIA

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

NOVEMBER 3, 2009

Serial No. 111–36

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

JUDY CHU, California

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

BLAINE LUETKEMEYER, Missouri

ANH ‘‘JOSEPH’’ CAO, Louisiana

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL SERVICE, AND THE DISTRICT OF

COLUMBIA

STEPHEN F. LYNCH, Massachusetts, Chairman

ELEANOR HOLMES NORTON, District of

Columbia

DANNY K. DAVIS, Illinois

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

WM. LACY CLAY, Missouri

GERALD E. CONNOLLY, Virginia

JASON CHAFFETZ, Utah

MARK E. SOUDER, Indiana

BRIAN P. BILBRAY, California

ANH ‘‘JOSEPH’’ CAO, Louisiana

WILLIAM MILES, Staff Director

(III)

C O N T E N T S

Page

Hearing held on November 3, 2009 ........................................................................ 1

Statement of:

Long, Greg, Executive Director, Federal Retirement Thrift Investment

Board; James Sauber, Chair, Employee Thrift Advisory Council; J.

David Cox, national secretary-treasurer, American Federation of Government Employees [AFL–CIO]; Colleen Kelley, president, National

Treasury Employees Union; Margaret Baptiste, president, National Active and Retired Federal Employees Association; Richard Strombotne,

ETAC representative, Senior Executives Association; and Colonel Michael Hayden, USAF, retired, deputy director, Government Relations,

Military Officers Association of America .................................................... 8

Baptiste, Margaret .................................................................................... 54

Cox, J. David ............................................................................................. 34

Hayden, Colonel Michael .......................................................................... 75

Kelley, Colleen ........................................................................................... 47

Long, Greg ................................................................................................. 8

Sauber, James ........................................................................................... 27

Strombotne, Richard ................................................................................. 68

Letters, statements, etc., submitted for the record by:

Baptiste, Margaret, president, National Active and Retired Federal Employees Association, prepared statement of ................................................ 56

Chaffetz, Hon. Jason, a Representative in Congress from the State of

Utah, prepared statement of ........................................................................ 91

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 96

Cox, J. David, national secretary-treasurer, American Federation of Government Employees [AFL–CIO], prepared statement of ........................... 36

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 92

Hayden, Colonel Michael, USAF, retired, deputy director, Government

Relations, Military Officers Association of America, prepared statement

of ..................................................................................................................... 77

Kelley, Colleen, president, National Treasury Employees Union, prepared

statement of ................................................................................................... 49

Long, Greg, Executive Director, Federal Retirement Thrift Investment

Board, prepared statement of ...................................................................... 11

Lynch, Hon. Stephen F., a Representative in Congress from the State

of Massachusetts, prepared statement of ................................................... 3

Sauber, James, Chair, Employee Thrift Advisory Council, prepared statement of ........................................................................................................... 29

Strombotne, Richard, ETAC representative, Senior Executives Association, prepared statement of .......................................................................... 70

(1)

MANAGING THE THRIFT SAVINGS PLAN TO

THRIVE

TUESDAY, NOVEMBER 3, 2009

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL

SERVICE, AND THE DISTRICT OF COLUMBIA, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2:06 p.m., in room

2154, Rayburn House Office Building, Hon. Stephen F. Lynch

(chairman of the subcommittee) presiding.

Present: Representatives Lynch, Cummings, Connolly, Chaffetz,

Bilbray, and Cao.

Staff present: William Miles, staff director; Aisha Elkheshin,

clerk/legislative assistant; Jill Crissman, professional staff; Dan

Zeidman, deputy clerk/legislative assistant; Adam Fromm, minority

chief clerk and Member liaison; Howard Denis, minority senior

counsel; and Alex Cooper, minority professional staff member.

Mr. LYNCH. The subcommittee on the Federal Workforce, Postal

Service, and the District of Columbia hearing will now come to

order. I understand we have many things going on on the floor

today, and I think the ranking member, Mr. Chaffetz, is there now,

and we are also expecting some Members to come over, so we will

have to do the best we can. And in the event that Members are not

present, we will allow them in the record to submit testimony at

a later time.

I do want to welcome the Members who are here in the hearing,

witnesses, all those in attendance. The purpose of this hearing is

to examine a host of issues confronting the Federal Retirement

Thrift Investment Board as it upgrades the TSP, the Thrift Savings

Plan, infrastructure and security capabilities in response to multiple legislative initiatives, regulatory proposals and a changed financial landscape.

The Chair, ranking member and subcommittee members will

each have 5 minutes to make opening statements, and all Members

will have 3 days within which to add statements to the record and

any other incidental documents.

Ladies and gentlemen, despite recent signs of economic recovery,

the past year has been a fairly tumultuous year in the financial

world, which is why I have called today’s hearing to discuss and

assess the status of the Thrift Savings Plan. Millions of Americans

have lost a significant portion of their 401(k) retirement savings

during the latest market downturn, and the TSP, which is basically

our 401(k) of the Federal community has not been immune, as

2

many Federal employee TSP accounts demonstrate. They have also

been significantly diminished in size. Given the absolutely integral

role the TSP plays in determining the future retirement income of

FERS employees, I feel it is critically important that the subcommittee conduct routine oversight of this aspect of the Federal

Employees Retirement System.

Therefore, today’s hearing is intended to compare the TSP’s performance against private sector plans, as well as to discuss whether Federal employees, annuitants and survivors have been given

the right plan and the proper tools to build an adequate retirement. Additionally, the recent enactment of the tobacco bill, H.R.

1256, included several major TSP-related provisions, which I am

proud to highlight were also included in a bill I introduced, H.R.

1263, such as instituting both auto-enrollment and immediate

agency contributions as well as creating a Roth 401(k) option and

authorizing a mutual fund window. These recent changes deserve

our close attention, especially during the critical developmental and

implementation stages, which again point to the relevance of today’s hearing.

I would also like to note the need for further debate over the addition of a mutual fund window feature for the TSP. As this option

is being pondered, I believe it is important that we all have some

level of understanding about the potential impact such changes

could have on raising costs and administrative fees while at the

same time giving fair consideration to the need to provide TSP participants with adequate investment options.

Today’s hearing will also provide us a chance to hear from the

board about the upcoming roll out of the new TSP Web site and

its recent $18 million capital investment. Further, today’s hearing

will provide employees’ representative groups opportunities to

share suggested regulatory and or legislative proposals. It is my

hope that the testimony feedback we receive today will provide the

committee with precise guidance and direction. Again, I thank each

of you for being with us this afternoon, and I look forward to your

participation. This concludes my opening statement.

And I will now yield to my friend and colleague, Mr. Chaffetz,

for his opening statement.

[The prepared statement of Hon. Stephen F. Lynch follows:]

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Mr. CHAFFETZ. Thank you, Mr. Chairman.

As a fan of ‘‘just in time,’’ I have to tell you, I appreciate your

patience and indulgence. I know I am a few minutes late, having

been detained there on the floor, but I appreciate your participation

and everybody here today and the expertise that you bring to bear

and the important matters that we will discuss today. I want to

thank the chairman for holding this hearing on such an important

matter.

The Thrift Savings Plan is a central component of the Federal

Employees Retirement System [FERS], and its success is critical

from a number of different standpoints. Clearly, the kind of retirement an employee is offered at a given job has a significant impact

on the employer’s ability to recruit and retain people with the best

skills and qualifications. Therefore, it is important that the TSP is

managed carefully and properly, which means regular congressional oversight and legislation when necessary.

This has been one of the most challenging economic years the

country has had in decades, and we are not out of the woods yet

by no means. The timing of this economic crisis has truly been

tragic for a number of reasons. The Federal Government is

disproportionally top heavy with employees who are rapidly approaching Federal retirement, and now many of them find that

while their defined benefits are intact, most FERS employees have

taken a massive hit to their retirement savings.

We all know that in the world of investments, there are always

ups and downs. The way of measured success of long-term investment is not in a snapshot of a year but over the life of an investment. This hearing will give us a chance to find out whether the

TSP and others responsible for its management believe they have

the necessary tools to complete the job or if there are things that

we in Congress can do to help.

The Thrift Savings Plan Enhancement Act of 2009 was signed

into law in June and made several improvements to the function

of the TSP. Perhaps most significantly, the Roth type investment

options was offered, allowing participants to pay taxes on retirement savings now rather than upon withdrawal. This is a great

tool, especially for younger employees at the lower end of their

earning spectrum.

However, this tool has been available in the rest of the investment world for decades. We also know that the TSP continues to

have far fewer investment options than most private retirement

programs. With that said, the TSP continues to outperform most

private 401(k)’s and is unparalleled in its low associated administrative costs.

TSP can be frustrating to navigate. However, I believe that how

the TSP interfaces with its participants is critical to its continued

success in participation. Improvements can still be made. When we

introduced these new investment tools as we did in June of this

year, we must also see that its participants are fully informed of

their available options. I look forward to working with the chairman and those responsible for managing the system to ensure that

Federal employees continue to have one of the best investment vehicles available anywhere, and appreciate the input and suggestions from the participants. Again, I thank you for your participaVerDate 11-MAY-2000 16:14 Mar 22, 2010 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 U:\DOCS\54697.TXT KATIE PsN: KATIE
5

tion and your being here today, and I will yield back the balance

of my time, Mr. Chairman.

Mr. LYNCH. Thank you. The Chair now recognizes the distinguished gentleman from Maryland, Mr. Cummings, for 5 minutes.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I won’t

take that much time.

And I do appreciate you holding this hearing today. The Federal

Employees Thrift Savings Plan is one of the best retirement plans

offered by any employer. Under the plan, the government contributes a specific dollar amount or percentage of pay into an employee’s account which can be invested in stocks, bonds or other financial instruments. This is an excellent program which many of our

Federal employees benefit from greatly, and we must do all that we

can in our power to ensure that it remains vibrant and strong. The

enactment of the Thrift Savings Plan back in 2009 brought about

some welcome changes to the program. That act permits new employees to begin contributing to the TSP, immediately rather than

waiting 6 to 12 months.

Early participation in the Federal Employees Retirement System,

particularly in the Thrift Savings Plan, is critical if an employee

is going to maximize the amount of savings earned for his or her

retirement. Not only does the act include provisions to eliminate

the waiting period requirements, but it authorizes automatic enrollment for all new Federal civil employees. Currently, the TSP

has 4.2 million participants. Automatic enrollment will largely increase participation in the savings plan.

The act also authorizes adding a new Roth 401(k) investment option, allowing participants to contribute after-tax dollars to the

TSP, therefore allowing them to withdraw contributions and associated earnings tax-free. Last, this act would allow spouses of deceased Federal employees to leave funds in the TSP and become

the managers of those accounts. I am eager to hear how some of

these provisions will be rolled out, the timeframes of these changes,

along with the new proposals, such as the unused annual leave

proposition allowing employees to deposit their unused annual

leave into their TSP accounts.

The TSP holds approximately $234 billion in assets, making it

the world’s largest defined-contribution plan. Hearings like this are

important to ensure that the program continues to serve the best

interests of Federal employees, uniform services, Reserves and

their spouses.

And with that, Mr. Chairman, I yield back.

Mr. LYNCH. Thank you.

The Chair now recognizes—actually, I know that the gentleman

from Louisiana, Mr. Cao, has declined the opportunity to make a

5-minute statement, but I do want him, since you are a new appointee to the committee, I did want to welcome you on behalf of

the committee and invite you to become, you know, deeply involved

in the issues that come before the committee. But by all means,

welcome.

Mr. CAO. Thank you very much, Mr. Chairman.

I am very honored to be in this committee and to address the

many issues that we are facing in this country, and I hope that my

6

contributions to this committee can somehow have some impact to

you from the problems that we are facing.

Mr. LYNCH. Thank you.

The Chair now recognizes the gentleman from northern Virginia,

Mr. Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman.

And thank you for holding this important hearing. Since it represents a substantial portion of most Federal employees’ retirement

savings, the Thrift Savings Plan is of vital importance to the Federal work force. It is the largest defined contribution retirement

plan arguably on earth, with 4.2 million participants and $234 billion in assets. In the past, some have attempted to use the TSP to

promote political objectives.

Fortunately, the Federal Retirement Thrift Investment Board

and the Employee Thrift Advisory Council have successfully fended

off those efforts, and as a result, the TSP has more value today.

Shortly before the real estate bubble burst, for example, some suggested that the TSP should have a fund which would be invested

in real estate investment trusts. Federal employees’ retirement

savings are safe today because we did not make that investment

at the height of the real estate market. The REIT index declined

40 percent just between January and April of this year. Others

have suggested creating gold, copper or other specialized TSP

funds.

Although Congress did give the Thrift Investment Advisory

Board authority to invest in funds, such as mutual funds, it did not

force the board to do so. The TSP already has six funds. One consists entirely of U.S. Treasury bonds; the others are a variety of

index funds. All of these funds represent fairly secure investments

over the long run, unlike more specialized investments and assets

that could fluctuate more than a diversified portfolio. Because the

TSP replaced part of the Federal employees defined-benefit pensions in 1986, it is appropriate that this fund be invested in a conservative manner that will maximize Federal employees’ retirement security.

The Thrift Advisory Board is considering creating an option for

Federal employees to invest their savings in mutual funds through

the TSP. Given the historically strong performance of the TSP, including its superior maintenance of value during the recent crisis

relative to many other privately managed funds, I find it hard to

understand why such a change would be advantageous for Federal

employees. Moreover, as the National Active and Retired Federal

Employees Association has noted, creating additional mutual fund

options could drive up TSP’s administrative costs. Currently just 80

TSP employees manage the world’s largest 401(k). We should be

very cautious about proposals that might reduce the efficiency of

this agency.

For these reasons, the Employee Thrift Advisory Council has resisted attempts to create mutual funds options within the TSP. In

the written testimony, the American Federation of Government

Employees, the National Active and Retired Federal Employees Association and the Senior Executives Association all have expressed

reservations about establishing mutual fund windows for TSP.

7

During apartheid, some Members of Congress unsuccessfully attempted to divest TSP investments from companies that did business in South Africa with that government. More recently, others

have proposed divesting from companies that are concerned with

the genocide in Sudan. I would be interested, Mr. Chairman, in

learning more about whether we could establish and should establish social responsibility criteria within the TSP without reducing

the security of Federal employees’ retirement in the administration

of the TSP.

Again, I want to thank Chairman Lynch for holding this hearing.

I applaud the TSP Employee Advisory Council and the Advisory

Board for resisting past attempts to make potentially risky investments and look forward to working with these groups to protect the

security of the TSP as we move forward. And I yield back.

Mr. LYNCH. I thank the gentleman. Before we move to witness

testimony, I would like to offer brief introductions of our panelists.

Greg Long is the Executive Director of the Federal Retirement

Thrift Investment Board, the agency that administers the TSP, and

serves as CEO and plan managing fiduciary. Prior to his appointment as Executive Director, Mr. Long was the TSP’s Director of

Product Development where he was responsible for strategic planning and the development of new services and savings products.

James Sauber is the chief of staff to the president of the National

Association of Letter Carriers, and in addition to his role at the

Letter Carriers Association, Mr. Sauber has served on a voluntary

basis since 2003 as the elected chairman of the statutorily created

Employee Thrift Advisory Council [ETAC]. I will try to keep the

acronyms to a minimum today.

J. David Cox is the national secretary-treasurer of the American

Federation of Government Employees, the Nation’s largest union

representing Federal and D.C. government employees. Previously

Mr. Cox served as the co-chair of the Veterans Affairs National

Partnership Council from 1999 to 2000, and again from 2002 to

2006.

President Colleen Kelly is the president of the National Treasury

Employees Union, the Nation’s largest independent Federal-sector

union, representing employees in 31 different government agencies.

Ms. Kelley is a former IRS revenue agent and was first elected to

the union’s top post in August 1999.

Richard Strombotne has represented the senior—wait a minute.

We are out of order. OK.

Margaret, I am sorry. I will go with you. They have the pages

out of order. Margaret L. Baptiste was reelected for a second 2-year

term as the National Association of Retired Federal Employees national president in September 2008. She is the first woman to be

elected as NARFE president and first spouse of a Federal retiree

to hold the position.

Richard Strombotne has represented the Senior Executives Association on ETAC for 10 years as a charter member of the SEA, the

Senior Executives Association. He served on its Board of Directors

for 8 years. Additionally, Mr. Strombotne has been extensively involved with the National Active and Retired Federal Employees Association.

8

And last but certainly not least, Colonel Michael Hayden, U.S.

Air Force, retired, joined the MOAA legislative team in July 2005

upon completion of a 25-year military career in air and space operations, personnel recruiting, training and education. At the MOAA,

he focused on active duty and retirement compensation issues.

That concludes the introduction of our witnesses. However, it is

the custom and practice at this committee to swear witnesses so

that they may offer testimony on the record. May I please ask you

to rise and raise your right hands.

[Witnesses sworn.]

Mr. LYNCH. Let the record indicate that each witness answered

in the affirmative.

Your entire statement is already included in the record. We will

now move to the testimony portion. And I would just advise you,

those small boxes in front of you, one which is working and one

which is not working, the green light indicates you may proceed

with your testimony. A yellow light indicates you should probably

wrap it up. And the red light indicates that your time has expired.

And since we have a large panel here, I will try to hold everybody

to the 5-minute limit.

But Mr. Long, you are welcome and recognized for 5 minutes for

an opening statement.

STATEMENTS OF GREG LONG, EXECUTIVE DIRECTOR, FEDERAL RETIREMENT THRIFT INVESTMENT BOARD; JAMES

SAUBER, CHAIR, EMPLOYEE THRIFT ADVISORY COUNCIL; J.

DAVID COX, NATIONAL SECRETARY-TREASURER, AMERICAN

FEDERATION OF GOVERNMENT EMPLOYEES [AFL–CIO]; COLLEEN KELLEY, PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION; MARGARET BAPTISTE, PRESIDENT, NATIONAL

ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION;

RICHARD STROMBOTNE, ETAC REPRESENTATIVE, SENIOR

EXECUTIVES ASSOCIATION; AND COLONEL MICHAEL HAYDEN, USAF, RETIRED, DEPUTY DIRECTOR, GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF AMERICA

STATEMENT OF GREG LONG

Mr. LONG. Chairman Lynch and members of the subcommittee,

my name is Greg Long. I’m the Executive Director of the Federal

Retirement Thrift Investment Board. The five members the board

and I serve as the fiduciaries of the TSP for Federal employees and

members of the uniformed services.

The TSP, as you said, is the largest defined-contribution retirement plan in the world. Accounts are maintained for more than 4.2

million Federal and Postal employee members of the uniformed

services and retirees. As of September 30th, the TSP had approximately $234 billion in retirement savings. Your letter of invitation

explained that the purpose of this hearing is to examine a host of

issues, including upgrades to the TSP’s information technology, security capabilities, legislative initiatives, regulatory proposals and

a changed financial landscape.

I am pleased to discuss each of these matters. Before I do, however, I’d like to note that I am surrounded by individuals representing organizations whose knowledge and commitment to the

9

TSP goes back 26 years. Their knowledge and support have been

essential in making the TSP the success that it is today.

Turning our attention to IT infrastructure, it’s appropriate that

IT infrastructure and security are the first items cited in your letter. The fiscal year 2010 budget, approved by the Board just last

month, demonstrates our commitment to infrastructure security

and other vital record keeping activities; $99 million, or approximately 76 percent of our total budget, is dedicated to these areas.

We have an ambitious agenda to improve the TSP. The Thrift

Savings Plan Enhancement Act of 2009 provides substantial new

benefits which we must implement. Further, other improvements,

like updating the TSP Web site and implementing e-messaging capabilities, demand agency resources.

The TSP’s expenses are born not by the taxpayers but by participants. During 2008, the TSP expense ratio was 2 basis points, or

20 cents, for every $1,000 invested by a participant. This compares

very favorably to other similar plans.

Despite our low administrative expenses, we nevertheless maintain a robust IT infrastructure to support activities. Attached to my

statement is a status report presented by the agency’s director of

automated systems to the Board and to ETAC at the joint meeting

we held last October. You’ll note that report covers our recently

completed capital investments for our systems modernization, as

well as a status report on data center and software applications.

On April 29th of last year, I appeared before this subcommittee

to express the board’s support for automatically enrolling newly

hired employees in the TSP. As the Congress developed its legislation on that issue, it added provisions which bring the TSP up to

date with comparable private sector 401(k) plans in a number of

areas. Together these legislative changes make the TSP an even

more flexible and valuable program. I come before you today to say

thank you and to describe our plans for implementing these multiple legislative initiatives.

First is immediate agency contributions. As soon as the new law

was signed on June 22nd, the waiting period for FERS employees

to receive agency contributions was eliminated. All FERS employees should now be receiving agency automatic 1 percent contributions, and if they are contributing their own money, agency matching contributions as well.

Next is accounts for spouse beneficiaries. Beginning in the spring

of 2010, if a participant dies and the spouse is the beneficiary of

the participant’s TSP account, the spouse will have the option of

leaving the death benefit payment in the TSP in his or her own

name.

Third, automatic enrollment. Starting next spring, newly hired

Federal civilian employees will automatically make payroll contributions of 3 percent of pay to the TSP. Their agencies will send

these contributions to the TSP along with an additional amount

equaling 4 percent of pay, which is made up of 1 percent automatic

and 3 percent matching contributions, each pay period, unless the

employee decides to opt out or contribute a different amount. This

will give new employees a chance to start saving earlier, to receive

agency contributions and potentially reach greater levels of retirement security.

10

Fourth is the Roth feature. In 2011, we plan to offer a Roth feature which will be the equivalent of a private sector Roth 401. This

is subject to different tax rules than a Roth IRA and open to people

of all income levels. Employee contributions to the Roth TSP will

be made on an after-tax basis, and participants will generally not

have to pay Federal income tax on money they withdraw from it.

We estimate it will take about 2 years to implement this benefit.

It will require substantial modifications to agency as well as uniform services human resource and personnel systems as well as our

own TSP systems and their accounting and associated systems.

The fifth feature is the mutual fund window. This legislation allows the TSP to offer a mutual fund window in the future. This

would allow participants to invest some of their TSP savings in

mutual funds outside of the TSP. Expenses related to the mutual

fund window would be born solely by those participants who use

it. The TSP has not set any implementation target or date. We will

further consider this operation in cooperation with the unions and

associations that make up ETAC.

Mr. LYNCH. Mr. Long, you need to wrap it up.

Mr. LONG. The regulatory proposals are simply unused leave.

That is something which requires a change to FERSA, and we

would be happy to work with Congress and ETAC in getting that

done.

And finally, the limits on interfund transfers. This is a policy

that we implemented last year based on a very small number of

participants trading very actively, driving expenses, and we’ve

taken steps to eliminate that problem. Thank you very much. I’ll

be willing to take questions.

[The prepared statement of Mr. Long follows:]

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Mr. LYNCH. Thank you, Mr. Long.

Mr. Sauber, you are now recognized for 5 minutes.

STATEMENT OF JAMES SAUBER

Mr. SAUBER. Good afternoon, Mr. Chairman, members of the

committee. My name is Jim Sauber. I represent the National Association of Letter Carriers, and have served as the Council’s Chair

since 2003.

The Thrift Savings Plan is an extremely important part of the

Federal retirement system and is very popular among the 4.2 million Federal employees and retirees who maintain TSP accounts.

Protecting the $234 billion invested in the TSP, which are the personal assets of our members, is ETAC’s highest priority. We also

use the twice-a-year meetings we hold with the Board to address

administrative issues and service problems.

At our most recent meeting, on October 19th, we met with the

entire Board and received briefings on the new TSP Web site and

the agency’s ongoing effort to improve its IT infrastructure.

On behalf of the ETAC, I want to thank you, Mr. Chairman, for

your leadership in enacting the TSP Enhancement Act of 2009.

Your introduction of H.R. 1263 at the beginning of this Congress

got the ball rolling with cosponsors from both parties. TSP participants very much appreciate the improvements in the plan provided

by your bill.

The authorization of immediate TSP matching contributions and

automatic enrollment will significantly boost participation in the

TSP among younger workers and increase the level of savings

among new employees.

We also very much welcome the legal change that will permit the

spouses of deceased participants to keep their inherited funds in

the TSP instead of rolling them over into much more expensive

plans.

Many Federal employees will also welcome the Roth option in the

TSP when it becomes available, especially the hundreds of thousands of men and women in the Armed Forces.

Thanks, again, to all of you who supported these improvements.

Of course, we’ll continue to look for new ways to improve the

plan. One such improvement springs to mind. Recently the IRS has

ruled that 401(k) participants may contribute the dollar value of

unused leave that might be forfeited or paid out as terminal leave

into their plans. ETAC and its organizations urge Congress to

amend FERS to allow this practice in the TSP the next time you

take up TSP legislation.

We also ask this subcommittee to use its influence to facilitate

the prompt appointment and or reappointment of members to the

Thrift Investment Board. At present, all five members of the Board

are serving beyond their terms of office. Three of them, Chairman

Andrew Saul and members Alex Sanchez and Gordon Whiting,

have expressed interest in being renominated, while two others

wish to leave the Board. Although all five positions of the Board

are Presidential appointments, by law, two nominees are recommended by the Speaker of the House and the Senate Majority

Leader.

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Most of the organizations that make up ETAC have supported

the renominations of Saul, Sanchez and Whiting, both last year

with President Bush and this year with President Obama. They

performed well and have maintained excellent lines of communications with ETAC. Congress intended Board members to serve staggered terms to promote stability and continuity, and we believe it

would be unwise to turn over the entire membership of the Board

all at one time.

We hope the subcommittee will urge the Obama administration

to move as quickly as possible on these appointments, and that you

will encourage the Speaker of the House to do the same with respect to her recommended nominee.

Finally, I wish to conclude by noting that Federal and Postal employees have remained committed to the TSP despite the severe

economic crisis. There is no way to sugarcoat the heavy losses experienced by many TSP participants last year. The C, S, and I

funds all declined by more than 37 percent in 2008. Although the

equity markets have bounced back somewhat this year, many of

our members have had to alter their retirement plans as a result

of these TSP losses.

One silver lining in the TSP has been the performance of the

lifecycle funds. Thanks to the diversification provided by the L

funds, the losses from last year’s meltdown on Wall Street were

somewhat mitigated for those who chose them. In fact, the TSP

lifecycle funds performed much better than similar funds in the

private sector. Losses in the TSP’s 2010 fund, for example, were

less than half those experienced by investors in 2010 funds offered

by Fidelity and Vanguard.

Our recent experience serves to remind us of the wisdom shown

by Congress when it designed FERS back in 1986 and sought to

strike a balance between portability and security. TSP is just one

component of the three-legged retirement stool, and thanks to the

other two legs, guaranteed benefits from Social Security and the

FERS basic annuity, the losses incurred last year by Federal employees in the TSP will not be catastrophic, even for those close to

retirement.

Far too many workers in America have seen their defined-benefit

pensions cashed out, and far too many workers are now exposed to

excessive market risk in standalone 401(k)’s. Millions of workers

have suffered a sickening blow to their retirement security as a result. We owe it to all of them to rebuild America’s pension system

once this crisis passes. FERS would be a good model to emulate.

Thank you again for inviting me to this hearing.

[The prepared statement of Mr. Sauber follows:]

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Mr. LYNCH. Thank you, sir. Appreciate that.

Mr. Cox, you’re now recognized for 5 minutes.

STATEMENT OF J. DAVID COX

Mr. COX. Mr. Chairman and members of the committee, thank

you for the opportunity to testify today on the policies, regulations,

and administration of the TSP.

The Thrift Savings Plan Enhancement Act of 2009 created many

changes for the TSP. AFGE supported passage of the bill, but we

did not support all of its elements. We strongly supported immediate agency contributions, spousal benefits, Roth-type accounts

and automatic enrollment for new employees.

However, establishing a mutual fund window in the TSP is another story. AFGE opposed the mutual fund window because we

firmly believe that the current collection of investment options

within the program is close to optimal. We believe that, in almost

every case, Federal employees who would use the mutual fund window would lower their overall rate of return on their savings.

Further, it is not the practice of other defined-contribution programs to allow participants to have such a window, largely because

it imposes large and unnecessary risk and expense.

One of the main virtues of the TSP is its extraordinarily low administrative costs. There is no real benefit for a TSP participant to

choose to invest in a private mutual fund rather than the current

TSP funds. Mutual fund fees can eat up half or more of an investor’s return over time.

Unless the TSP is able to negotiate comparable cost, fees and

profits with the investment management companies, AFGE believes it’s not in the best interest of the plan’s participants to pursue the mutual fund window option because administrators are required as part of that fiduciary responsibility to act solely in the

interest of the participants. AFGE believes that the TSP should not

exercise its authority under the law to create the mutual fund window.

An important issue left unaddressed last year was to change

Title 5 to allow Federal employees to deposit the dollar value of unused annual leave into their TSP accounts. Internal Revenue Service rules now let private-sector employees contribute the value of

their use-or-lose paid time off into their 401(k) account as long as

the employee would be eligible to receive the dollar value of the unused leave in a lump sum at retirement. Federal employees can

convert unused annual leave into a lump sum at requirement. Federal employees are forced to use or lose annual leave. They are subject to limits on the amount of annual leave they can carry over

each year. When Federal employees retire, they’re eligible to receive a lump sum of the dollar value of any unused annual leave.

Unfortunately, in order for the Federal employees to be able to

take advantage of the current IRS rules regarding the deposit of

dollars of unused paid leave into their TSP accounts, Congress

must amend the current law. AFGE joins with others in urging the

lawmakers to make this important change so that Federal employees have the same opportunities for retirement savings as their

counterparts in the private sector and State and local governments.

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When Congress was working to develop the Federal Employees

Retirement System [FERS], AFGE worked hard to make sure that

the legislation would require the establishment of an employee advisory committee for the TSP so that the concerns of the employees

who finance the bulk of the plan’s assets would be heard and considered. The law that was enacted did provide for such a forum,

and I’m happy to report that the Employee Thrift Advisory Committee [ETAC], has operated effectively. It has also served to keep

Federal employees informed and educated on how to make the

most of their opportunities under the law.

We also believe that Federal employees in the investment board

have benefited immensely from the unions’ ability to help determine the policy direction of the TSP. Indeed, the ETAC works so

well for both Federal employees and the TSP program itself that

AFGE is working to establish a similar employee advisory committee for the Federal Employees Health Benefits Program, which

lacks any means for Federal employee input.

We firmly believe that with the establishment of an ETAC-like

advisory structure for FEHBP, it might be possible for that program to begin to obtain some of the virtues of the TSP with regard

to efficiency and transparency and accountability.

The last, Mr. Chairman, is that we believe that TSP has been

using a lot of outsourcing for its work and would encourage the

committee to look at the fact that those jobs need to be done inhouse and provided by government services because they are inherently governmental.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Cox follows:]

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Mr. LYNCH. Thank you.

President Kelley, you’re now recognized for 5 minutes.

STATEMENT OF COLLEEN KELLEY

Ms. KELLEY. Thank you very much, Chairman Lynch, Ranking

Member Chaffetz, and other committee members, for being here

and for the opportunity to testify on recent developments and plans

for the future of the Federal Retirement Thrift Investment Board.

Our members have been generally pleased with the Thrift Savings Plan and with thrift board policy. We have found low administrative overhead, good return on investments and an open dialog.

TSP administrative costs compare very favorably with private

401(k) plans. With input from employee organizations with informed and prudent leadership by the Board and by the TSP managers and with your oversight, we think there are good systems in

place to aid the TSP in remaining an important part of the Federal

employees retirement.

As we all know, the last couple of years have been a very volatile

time for the TSP Board and for every plan that’s tied to market

forces. And we have heard of the many recent advancements and

legislative changes to the Thrift Savings Plan. As an active member of the ETAC, NTEU has participated in policy decisions that

affect the fund. NTEU’s primary concern is protecting the stability

and maintaining the viability of TSP for our members and for all

Federal employees.

Recent changes made to the Thrift Savings Plan which have been

talked about include the immediate agency contributions and the

automatic enrollment provision, and they have been noted, and

they are very positive development for Federal employees. Hopefully, they will help employees to start saving for retirement immediately and to maintain or improve their savings rate as they move

through their careers.

NTEU worked with the board to make sure that the automatic

enrollment also includes an opt-out provision so that employees can

decline to participate if they find they cannot afford to contribute.

The other change that was mentioned that is very important of

course is the spousal beneficiary account. NTEU has heard from

several members who are waiting for this option to begin, and we

believe this is very valuable reform, and we are very pleased it was

part of the final bill.

The legislation also created the Roth TSP feature, which we have

heard about. And this option requires extensive modification to

both agency and TSP recordkeeping and accounting systems. While

systems updates will be needed to be monitored closely, NTEU

views the Roth option as a welcome addition to the plan, especially

for younger workers.

However, the board must be prepared to educate the Federal

work force on the tax planning issues inherent to a Roth option,

which are not automatically understood or necessarily easy to understand.

And finally, the provision that everyone has talked about, this

mutual fund window. You know, in the abstract, NTEU thinks a

mutual fund is a good idea, in the abstract. If a person wanted to

invest in only socially conscious firms or in gold or oil futures, one

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could do that. Having a variety of funds to invest is in a desirable

goal.

ETAC considered this option, and after a wide range of views

were presented, no consensus was reached. The Council believes

that the plan has enough diverse accounts within each of the five

funds. And with the addition of the five lifecycle funds, participants

have excellent opportunities to earn money on their retirement savings.

On the other hand, we know there have been some participants

who wanted to invest in certain types of stocks that are not available. We look forward to the Board’s analysis of the cost, the benefit, and the risk associated with mutual funds.

NTEU’s bottom line on this is, what is it that is the best interest

of our members?

In his weekly address on September 5th, President Obama focused his remarks on reviving the economy and creating incentives

to save. One of those initiatives was to allow employees to invest

their employer payouts for unused leave into their retirement

plans, as we’ve heard. On behalf of our members, NTEU contacted

both the IRS and the Thrift Board to inquire whether or not this

could be applied to Federal employees. Many of our members carry

over their maximum amount of annual leave on a yearly basis,

which is capped at 240 hours, so this could significantly boost their

TSP accounts.

But both the IRS and the Thrift Board have indicated to NTEU

that in order for Federal employees to take advantage of President

Obama’s initiative, legislation would be needed to amend the Code.

While NTEU is continuing to pursue this option along with others,

we ask for your help, Mr. Chairman, and for this subcommittee in

working together to write and to achieve passage of such legislation.

In closing, we appreciate your oversight of the TSP. It is an important part of the Federal retirement. We need to make sure that

the Board is working to ensure that all participants understand the

changes taking place within the TSP, most importantly the Roth

option and the new spousal benefit. Employees need to be able to

make informed choices.

There must be a careful and deliberate review before any

changes such as the mutual fund window are added. The No. 1 goal

is to ensure stability, integrity, and cost efficiency in the TSP so

that, as this hearing title today states, the fund will thrive and our

retirees will prosper. Thank you, and I’m glad to answer any questions you have.

[The prepared statement of Ms. Kelley follows:]

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Mr. LYNCH. Thank you.

Ms. Baptiste, you’re recognized for 5 minutes.

STATEMENT OF MARGARET BAPTISTE

Ms. BAPTISTE. We are proud of NARFE’s work with Congress in

1986 to create the Thrift Savings Plan. Indeed, by any measure,

the TSP has been a huge success.

Despite the current volatile financial market, we believe the Federal Retirement Thrift Investment Board has continued to perform

admirably.

Unfortunately, many TSP participants have had losses during

this downturn. Federal workers years away from retirement should

have time to recover. But employees at or near retirement don’t

have that luxury. Most of them will either retire with a smaller

nest egg or work until the market rebounds.

Retirement plans were created so that employees could avoid

working into old age and also to make room for younger workers

to take their places. As employers have migrated away from defined-benefit annuities to defined-contribution savings plans, the

burdens of retirement liabilities and risk have been shifted from

employer to employee. But the purpose of retirement programs are

negated when workers cannot afford to retire until they make up

for lost gains.

Fortunately, the retirement security of FERS workers is diversified with the three-legged stool of the TSP, a relatively modest annuity, and Social Security benefits. In 1998, a proposal was made

which undermined the FERS annuity and diverted the agency and

employee contributions for it to a new and separate fund within the

TSP. This was and is a bad idea because it threatened the defined

benefit of the FERS retirement stool which, as evidenced by the recent market slump, has become an essential safety net for FERS

workers. Still, the FERS annuity lacks the full inflation protection

afforded to CSRS workers.

That’s why NARFE supports COLAs for all federally administered retirement programs. What’s more, for some Federal workers,

the Social Security leg of retirement is eroded by the so-called

windfall elimination provision or WEP. NARFE supports H.R. 235,

legislation to repeal the WEP and the related government pension

offset.

For years we have worked to improve the TSP by conforming it

to 401(k) plan rules and by adding new features to the TSP, which

are consistent with the program’s investment philosophy. With

your help, Mr. Chairman, we are pleased that several TSP improvements became law in June. For example, the most important

enhancement in the program’s history was made when newly hired

Federal employees were automatically enrolled in the TSP, provided an immediate matching contribution. Now more Federal employees will be better prepared for their retirement.

NARFE supported adding a Roth option to allow participants to

make after-tax contributions to the plan and withdraw their earnings tax-free upon retirement. In addition, we are happy the new

law will give surviving spouses the same rights over their inherited

accounts as any other TSP participant.

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Beyond these improvements we are concerned about the new

self-directed option to allow participants to invest their accounts in

funds outside the TSP. Indeed, the administrative costs incurred by

funds beyond TSP are usually much higher and many lack the reduced risk and proven long-term performance of TSP’s well diversified index funds. For that reason, NARFE fears the participants

could take on too much risk. We urge the Thrift Board to consider

limitations on funds invested outside of TSP to ensure that participants do not put all their eggs into one basket.

Some have said the self-directed option was included to placate

interests in offering single-sector funds in the TSP. The Thrift

Board has advised against adding such funds because they conflict

with the program’s diversified investment strategy. NARFE agrees,

and we urge Congress and the Thrift Board to base fund decisions

on carefully crafted objective financial analysis and not politics.

Still, more must be done to advance the program further. As has

been said, President Obama said that employees should have the

option of putting payments for unused leave into their 401(k)’s. As

a matter of equity, NARFE believes that Federal workers should

have this choice if it is offered to private-sector employees. NARFE

also supports a proposal to allow Federal workers to contribute bonuses into their tax deferred accounts.

And while NARFE seeks the means to maximize retirement savings, we are concerned that the Federal Government does not do

enough to educate its own workers saving for retirement.

We commend you for your interest in making the Thrift Savings

Plan continue to thrive. And thank you for inviting us to testify.

[The prepared statement of Ms. Baptiste follows:]

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Mr. LYNCH. Thank you.

Mr. Strombotne, you are now recognized for 5 minutes.

STATEMENT OF RICHARD STROMBOTNE

Mr. STROMBOTNE. Chairman Lynch, and distinguished members

of the subcommittee, I want to thank you very much for the opportunity to testify before this subcommittee on the perspective of the

Senior Executives Association relating to the Thrift Savings Plan.

For the past 10 years, I have served as the representative of the

Senior Executives Association on the Employee Thrift Advisory

Council. I served as the chairman of SEA’s Task Force on Retirement Issues during the mid-1980’s, when both the Federal Employees Retirement System and the Thrift Savings Plan were created.

And I spearheaded SEA’s efforts to ensure that CSRS employees

could contribute 5 percent of their salary to the Thrift Savings

Plan. And SEA has participated as a member of the Employee

Thrift Advisory Council since its inception.

The Thrift Savings Plan has not been a static retirement plan.

ETAC and its members have worked together to consider and implement new offerings to upgrade the Thrift Savings Plan and

make it more useful to its employees. Over the last decade, such

upgrades, including adding the small cap and international funds

to the original G fund, large cap and fixed-income funds, and adding the option to invest in the lifecycle funds, and providing access

to Thrift Savings Plan participants, assuring that they can easily

access information about their plan and access the account to manage their contributions.

The new features that significantly upgrade the Thrift Savings

Plan were signed into law by President Obama, and SEA supports

the passage of many of these features and believes that they will

provide long term benefits.

Much has been said already about the Roth option, and I would

applaud that, as well as the automatic enrollment of new employees.

But I want to take just a moment to talk about the beneficiary

accounts for the surviving spouses. Prior to this change, the

spouses of deceased Federal employees had a choice of receiving a

payout of the Thrift Savings Plan account in a lump sum or transferring the money into a rollover IRA. Neither of these options was

ideal as the lump-sum payment had tax consequences and the rollover IRA had higher administrative costs than the Thrift Savings

Plan, as you’ve heard. And the new law allows spouses who are the

beneficiary of an account to keep the funds in the Thrift Savings

Plan and become the managers of these accounts. It also relieves

them of having to make an important financial decision in a time

of grief. This was pointed out to me by one of the members of

ETAC, and I think it’s a good point to make.

As the ETAC member who proposed this addition to the Thrift

Savings Plan, I was very happy to see it become law and very

pleased with the Federal Retirement Thrift Investments Board’s

prompt efforts to support its purpose. And Director Long reported

at the joint meeting of the Board and the Council on October 19th

that it’s already being used.

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On the mutual fund window, SEA has concerns about the mutual

fund window. It’s necessary to study this option further to determine whether the cost of implementation is feasible and practical.

We have a concern about the likelihood that this would overburden

already strapped human resource and personnel offices. And it’s

not at all clear that participants have the necessary investment expertise that would be needed to use a mutual fund window effectively because it’s a riskier investment than traditional funds.

With that in mind, the Senior Executives Association urges the

Thrift Investment Board to take a cautious approach to opening

the newly authorized mutual fund window.

As to looking for ways to improve the Thrift Savings Plan in the

future, there are two that we think would be very useful. One is

to provide the opportunity for employees who receive bonuses and

performance awards to contribute those in one—some amount; 1

percent ranging to 100 percent directly into the Thrift Savings

Plan. Military members can do this already, but it’s not available

for civilian employees. The bonuses are an important part of the

compensation package, especially for members of the Senior Executive Service, and the amount of money that a senior executive can

contribute to their Thrift Savings Plan is reduced compared with

the employees in the GS system. So we recommend that bonuses

and performance awards be included as allowable deposits.

And now, when employees retire, they receive lump-sum payments for their unused annual leave, and they cannot make this,

cannot use this as a payout, cannot use this payout to make a deposit. I had the experience of talking with one Federal retiree, a

woman who retired late in the year. She received a payout of her

annual leave in a lump sum. When she received the payment——

Mr. LYNCH. Mr. Strombotne, I just have to let you know you’re

way over your time.

Mr. STROMBOTNE. I’m sorry. Yes,I will conclude.

Mr. LYNCH. I appreciate it. Thank you.

Mr. STROMBOTNE. I’m through.

Mr. LYNCH. I didn’t mean to cut you off.

Mr. STROMBOTNE. Well, let me finish that one story. Because the

woman, when the lump-sum payout was added to her salary she

already received, it meant that she went over the means test for

Medicare, and so her Medicare premiums went up as a result. And

that’s the final story.

[The prepared statement of Mr. Strombotne follows:]

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Mr. LYNCH. Thank you, sir.

Colonel Hayden, you’re recognized for 5 minutes.

STATEMENT OF COLONEL MICHAEL HAYDEN

Colonel HAYDEN. Mr. Chairman, distinguished members of the

subcommittee, on behalf of the 375,000 members of the Military Officers Association, I’m grateful for the opportunity to present testimony on MOAA’s views of recent legislative changes to the Thrift

Savings Plan and potential other enhancements that could benefit

uniformed service members and their families.

The Thrift Savings Plan Enhancement Act of 2009, part of Public

Law 111–31, signed into law in June of this year, included two

noteworthy provisions for uniformed service members and their

families, provisions that had MOAA’s full support.

The first provision made some modest future increases in payments to military survivors affected by the offset of DOD’s Survivor

Benefit Plan by VA’s dependency and indemnity compensation. The

second provision, which is the focus of my testimony today, authorizes currently serving uniformed service members and Federal civilian employees a Roth savings option under the Federal Thrift

Savings Plan, a provision we have been advocating for since the advancement of the Roth 401(k) in 2006.

MOAA strongly supports a Roth TSP option under which participants pre-pay taxes on their contributions but watch their Roth

savings grow tax-free and enjoy tax-free withdrawals in retirement.

Providing a Roth option will be especially attractive for young service members in lower tax brackets, as well as career military people who receive part of their current pay as tax-free allowances but

can expect to have taxable retirement annuities.

MOAA believes providing a raw TSP option for currently serving

personnel is an equitable and enlightened action which will improve their long-term financial security. The family of our service

members surely deserve this option in light of their contributions

to our Nation.

Since the passage of the act, we are grateful that the Thrift Savings Plan Web site has taken a very proactive approach by posting

two informative fact sheets: one outlining the legislative changes to

the Thrift Savings Plan for Federal employees and service members, and another that provides frequently asked questions and answers.

The Q&A fact sheets makes the following key statements MOAA

intends to follow closely during the upcoming implementation period. The first is that uniformed members and Federal employees

could see a Roth TSP implementation as early as January 2011.

The second outlines that there will be no income restrictions on

Roth TSP contributions. And finally, the third outlines the Thrift

Savings Plan will develop a plan to educate eligible users on the

relevant advantages and disadvantages of the Roth versus regular

TSP. We believe this third bullet is crucial. Service members must

be provided concise decision information in order to determine if a

Roth TSP plan is right for them.

As for other TSP recommendations, we suggest a TSP conversion.

As was the case in the late 1990’s when a Roth IRA was first introduced, we recommend that with the implementation of a Roth TSP,

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military and Federal employees should be offered the option of converting some or all of their existing TSP accounts to Roth TSP accounts, regardless of their modified gross income.

Providing a conversion option is a win-win for both the participant and the Federal Government, especially in the current national deficit environment. Participants win by having the option to

convert, pay taxes now, and have their TSP earnings grow without

tax liability upon withdrawal. Additionally, the Federal Government wins by garnering more tax revenues now upfront.

Additionally, MOAA supports a change either in policy or law

that would allow uniformed service members to enjoy the same

TSP contribution options that Federal employees presently enjoy.

Currently, service members can only elect a whole percentage option for TSP contributions. Federal civilian employees have the option to contribute either a dollar amount or a percentage of a pay.

We believe that providing a fixed-dollar amount option would simplify the process for the service members.

Finally, as stated before, we believe a thorough education plan

will be instrumental to ensure the Roth rollout is implemented

most effectively. Therefore, MOAA recommends that TSP bring affected agencies together, to include Federal agencies and military

and veteran service organizations, in roundtable discussions to assist in developing the rollout education plan and necessary rulemaking policy. We feel a collaborative effort will produce a much

more comprehensive result.

So in conclusion, MOAA is grateful to the subcommittee for its

leadership on this issue and for the commitment of both Congress

and the Federal Retirement Thrift Investment Board to provide

this much-needed savings option for Federal employees and uniformed service members.

We look forward to assisting in the upcoming policymaking and

subsequent rollout as well as to your questions.

[The prepared statement of Colonel Hayden follows:]

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Mr. LYNCH. Thank you, Colonel. I now want to recognize myself

for 5 minutes. I want to say at the outset that I am very happy

with the way the Thrift Saving Plan works as a participant. That

is my own assessment. And I think it is very good. I agree with

the testimony that it has been a great success. On a scale of 1 to

10, I would give it an 8.

There needs to be some improvement. For instance, the Web site.

In the video game world, your Web site is Pong. It is simple, I understand that. It is very simple, it is very basic, very utilitarian,

but we can do better, I think. And I know you are already undertaking that, but I do think that it could stand some improvement.

I’m just going to go with the issues that have been laid out in

your testimony, some of it. As far as using unused annual leave for

deposit, I think that is a great idea because it is out there already

and for the IRS and has approved it, anticipating putting it in the

participating bill. I talked to the ranking member. He’s receptive

to it. So we’ll try to get it. We’ll probably move forward with that

when I get more assistance from the other members.

Also Mr. Cox, your comments regarding a similar advisory group

and that sector, as you have here—because it has worked out so

well—is also something that I would be willing to look at, and I

think it would be welcome.

Let me just say the one issue that has introduced some controversy and difference of opinion here has been the idea of a mutual fund window. And I understand both of the arguments, but I

think there might be a way to address all of those concerns and

still allow some flexibility here. And that might be—I am just suggesting—limiting the amount that any person, any participant,

might be able to venture in this window, whether it is a third of

what they have. I think there’s the real possibility of limiting

what’s available through the window.

In other words, it’s not the whole world of mutual funds there,

but there might be the ability to screen the cost structure that the

union representatives have raised and also some of the retiring

representatives raised about making sure that the cost structure

there is not prohibitive. In other words, to participate and be eligible through that window, you have to bring the costs down. And

I think having $224 billion in the fund gives a certain amount of

bargaining power to the TSP to put out that RFP to some of these

funds that might offer these packages.

So I think there’s some protections that we might introduce if we

were going to go forward with this. But they have to be consistent

with protecting the retirement of the participant. We can’t just

have people out there, day trading. That would be inconsistent

with our overall mission.

And last, the conversion question that you raised, Colonel Hayden, about converting existing TSPs to Roth, I think that is a very

interesting issue and I think the more that Roth becomes available

out there, I think that issue will percolate. So it is going to take

some thought, I think. So I think it is very, very interesting and

worthwhile in discussion.

Let me ask this. I know I am down to the end of my time. But

Mr. Long, the idea of TSP was really, I think, structured on buyand-hold. Buy-and-hold. That was my strategy, unfortunately, durVerDate 11-MAY-2000 16:14 Mar 22, 2010 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 U:\DOCS\54697.TXT KATIE PsN: KATIE
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ing this whole economic downturn. And is that something that we

need to move away from, or is that something that we can move

away from and still maintain the protection and adhere to the central purpose of the TSP?

Mr. LONG. The policy that’s been in place now for over 20 years

I don’t think needs change. The structure of the TSP and the policies behind it I do not think need to change. The vast majority of

participants appreciate the fact that we have a small number of

easily understood investment options, the vast majority of them

buy-and-hold. And I don’t think that is going to change, nor do I

think it should.

I think this leads up to the question of the mutual fund window:

Is it appropriate, can we figure out a way to make it work?

And there are a small number of participants that will, I think

in perpetuity, if the structure doesn’t change, will always say, well,

we should have the gold fund, the real estate fund, the socially conscious fund—and there’s an unending list of the whatever fund, fillin-the-blank.

If we seek a way to come up with solutions for the small portion

of the population, without doing anything to change what affects

the other 98 percent of participants that won’t use it, a mutual

fund window is a way to get there. You can structure it in such

a way that the cost of a mutual fund window, the people who use

it are the only people who pay for it. The people who don’t use it

don’t pay a nickle for it. That is critical.

And we certainly have anticipated that we would limit the total

amount of a percentage of an account that could go there. The

exact number, whether it’s 50 percent or 25 percent is certainly up

for debate. But the fundamental policy of the TSP simplicities

should not change.

Mr. LYNCH. Thank you. I yield to the ranking member for 5 minutes.

Mr. CHAFFETZ. Thank you, Mr. Chairman. Thank you all for your

testimony and for your comments.

Let me mention about the mutual funds, at least as an approach,

I would suggest that the idea of choice is a good one, that the individuals in different stations in life, have different backgrounds,

whether they have inherited certain things. There’s such an

unending array of possibilities that I think that the idea that they

could be properly educated in understanding the risk; that they’re

not just going on, you know, making a quick decision that 15 years

from now they may regret. They can also understand the risk and

reward. Maybe they want to be a little more aggressive.

I would hope and encourage and support efforts to move down

that path in a cautious way, but at the same time ultimately allowing the individual some degree of choice. And I would support that

push on the mutual—at least from a mutual fund point.

Mr. Long, I am a freshman. I am trying to understand these

issues and dive deeper into this. You made quite an assertion about

the low administrative costs, and I’ve certainly heard that far and

wide, but it is also my understanding that many of these costs are

deferred, if you will, and pushed over into, for instance, Treasury

and other groups. Well, you are not actually having the expense;

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actually, the taxpayers of the United States are having those expenses.

Can you help me understand how self-sufficient and cohesive this

group is, and what percentage and what dollars you’re talking

about are actually shared assets in the Federal Government, which

are hopefully shared by all the people in the United States, not just

the TSP?

Mr. LONG. The TSP does rely on human resource personnel

throughout the government. Every agency has a certain number of

personnel specialists that are required to pass out information.

Mr. CHAFFETZ. Going macro here on you, do we have a sense of

we’re budgeted for this amount of money and it takes this percentage of——

Mr. LONG. No is the short answer, and I do know that one of my

predecessors was asked this question years ago. They were not able

to get to an answer and thought it was—we were chasing our tails.

Mr. CHAFFETZ. Our time is short. I have 5 minutes, and I’m sure

we can go a couple rounds.

At some point I think that is important to understand—the self- sufficiency, again, in the grand scheme of a $3.9 trillion budget.

But to me, allowing the participants to pay for the administrative

costs I think is an important one. We are at a time when we are

$12 trillion in debt, and certainly we are not going to nitpick little

things. But at the same time, I think the principle of self-sufficiency is an important one.

I would love to followup with you and try at some point to tackle

that number, if that is OK with you.

Mr. LONG. Yes.

Mr. CHAFFETZ. Even if it is not, I would still like to pursue it.

The implementation of the Roth-type option, why does this process take so long? We are talking about a 2-year window. It can’t

be that complicated.

Mr. LONG. Yes, it is. This is an enormous project.

Mr. CHAFFETZ. Explain to me why it takes 2 years to try to implement something——

Mr. LONG. I’ll just explain the payroll side, which has nothing to

do with us.

All throughout the Government, payroll is done. Multiple agencies do payroll. Anytime you have moneys that are taken out

through the TSP—just like any 401(k)—those are pretax dollars, so

the paycheck is reduced, your taxable income for that year is now

reduced.

Now, all of a sudden, those payrolls are going to do changes and

say, OK your paycheck is reduced, but a portion of that which is

pretax—standard 401(k)—reduces your taxable income. But the

other amount that is still going to go to the 401(k) plan is going

to be Roth, so it is going to be removed from your paycheck but included in your taxable income. Just from a payroll side only, that

is an enormous change. From our standpoint, we are right now implementing software changes for our systems to be able to accept

that.

You’ve got recordkeeping changes, you’ve got communications

changes. It is a really big deal. It is what it boils down to. The

other changes on immediate contributions, also a big deal, but we

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are able to do it quickly. Automatic enrollment, a big deal, but not

half as big as Roth. Roth is an enormous project.

Mr. CHAFFETZ. Are there ongoing challenges, is there there any

way to speed up the timeline? Will you please let us know?

You stated in your testimony, Mr. Long, that the I fund incurred trading costs from roughly $16.5 million in 2007 and only $2.1 million in September. Just give me a sense of what’s happening there.

Is that because the economic environment has dwindled, or what

are the factors that are there?

Mr. LONG. We had a small group, less than 1 percent of the total

TSP population that were effectively active traders. They were

moving large amounts of money back and forth. So, a small population making large transfers on a daily basis. So every day, we

bundle up all of our total trades and submit a net trade to our investment manager. It gets either buy or sell. It gets executed every

day. That comes with a cost. You have to execute those in a different market.

By moving to a policy which we no longer permitted unlimited

transfers back and forth—we set a policy where two per month unlimited—reduce the trading activity, therefore reduce the volume of

the trades that we submit in the market each day, therefore drastically reduced our expenses.

The bottom line is now everybody else, all 4.2 million participants, have a little bit less in total trading expenses because of our

policy change to restrict a small number of participants.

Mr. CHAFFETZ. Thank you, Mr. Chairman. I know my time is up.

I don’t want to take any more time from Mr. Connolly, because

I know he wants to get home in plenty of time to watch the election

results of the races in Virginia.

Mr. LYNCH. Thank you very much. I’m not sure he’s going to be

pleased with the results.

The Chair recognizes the gentleman from Virginia, Mr. Connolly,

for 5 minutes.

Mr. CONNOLLY. It must be nice, Mr. Chairman, to come from a

political culture that’s unidimensional. We enjoy our political competition in Virginia.

Thank you, Mr. Chairman.

Let me ask, Mr. Long—and I’m going to ask Mr. Long once again

to speak into the microphone. I cannot hear you.

Tell me what the desirability is, from your point of view at least

potentially, of a mutual fund window.

Mr. LONG. The likelihood of how many participants would use it?

I assume in the single digits. It would be somewhere between 1

and 4 percent. It would be small.

Mr. CONNOLLY. Given the concerns you’ve heard raised at the

table, if it is only 1 to 4 percent, why do we want to pursue this?

Mr. LONG. Well, we want to get from an 8-out-of-10 to a 9-outof-10, and eventually a 10-out-of-10.

What you find is you have a small but very vocal group of disaffected participants. And in the end, do you want to provide solutions that help everybody?

What we can do here is for the participants that say I am very

unhappy because I can’t execute my desired trade in an equity

fund that does not invest in oil companies, that does not invest in

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tobacco companies, that does not invest in companies that support

non-democratic regimes, or does not permit me to execute my investment belief that Japanese airlines are going to be the best investment in 2010.

If we want to create a method by which those participants can

execute their investment beliefs, a mutual fund window is a way

to get that done. It is generally recognized by the consultant community that the ideal 401(k) design is a core group of small, very

broadly diversified funds, exactly what we have today in five funds,

plus a small menu of life cycle funds, which we have today. And

then add to that, for the small group of self-directed, for the people

that are on the frontier, offer them a window to execute their own

independent beliefs. That is a way to get it done.

We are not doing anything to move forward unless the members

of the ETAC, as well as the board—which both, by the way, have

divided opinions on this. Until we get those two groups together,

we are not doing anything on this.

Mr. CONNOLLY. Mr. Cox, you heard that. What’s wrong with that

approach?

Mr. COX. It is my job as a union representative to be concerned

about the risk for our members. I would say maybe many Members

of Congress come from a background that is a financial background

and are very savvy with their ability to invest, as well as some

other Federal employees. I would say out of AFG’s membership nationwide, many of whom are housekeeping aides, nursing assistants, nurses, correctional officers, those people, they are not that

savvy about investing. They want solid core funds that are dealing

with their retirement.

People still have the option to go out and invest their moneys

any way they want to in this country and to buy all type of stocks

and mutual funds and anything else they want to invest in.

But we are talking about protection of people’s retirement security and the better good of the whole. Even though we talk about

only 1 percent today, there’s predatory lending that’s in this country, there’s predatory marketing to Federal employees about various things.

So I just think it is a concern that we have of protecting our

membership and that 99 percent of them.

Mr. CONNOLLY. Mr. Long, Mr. Cox talks about some inherent

risks with going further abroad on the kinds of investments that

are allowed in TSP. If we had opened up TSP to the REIT investment that had been advocated when real estate was at its height,

what would have happened to people’s investments?

Mr. LONG. They would be very unhappy.

Mr. CONNOLLY. They would be very unhappy.

Mr. LONG. I know there was a proposal to create a real estate

investment trust fund, and it has been over the last year extremely

volatile, and, as you noted in your comments, for a period of several

months basically fell off the cliff. Yeah. If we had a fund at that

point, yes, I think the participants in that would not have been

happy.

What we are talking about here is something different, it is not

creating a new core fund, but creating a window by which a small

number of participants, with the appropriate protections, to say beVerDate 11-MAY-2000 16:14 Mar 22, 2010 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 U:\DOCS\54697.TXT KATIE PsN: KATIE
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fore you go through this window understand there are risks, there

are expenses, this is not for the novice investor. But if you choose

to invest a portion of your money in a mutual fund through this

window, you can do so.

Mr. CONNOLLY. Thank you. My time is up, Mr. Chairman.

Mr. LYNCH. Let me ask the participant representatives, from Mr.

Cox all the way down to Colonel Hayden—and you’ve each hit on

this a little bit—the need for education, the fact that we have a diversity of financial education within the people that we’re serving

here. We are going to have to have it with the Roth IRA, that is

going to have to be explained already, for what we are doing already. It is very likely that the payment of unused leave time, the

bonus issue, how do we get out there? What’s the best way, in your

experience in representing participants, to get that message out,

make sure that people, to the degree possible, are educated about

the options here? That would be especially difficult with the mutual fund piece because that can be complex for the best of us. How

do you think we might best accomplish that educational function

that’s going to have to happen in any event?

Mr. LONG. I would suggest two things. One is the Web site which

you had previously mentioned. More and more investment companies use those Web sites as very effective educational tools. That

needs to be developed, as you said, more than it is today. That is

one way.

The real issue, I think, for a lot of employees is they need someone to talk to, they need someone to be able to ask questions of.

And one of the things that has complicated this in recent years is

that used to be and should be the function of Human Resources in

the agencies. And more and more agencies are centralizing their

Human Resource functions and pulling them away from the employees who are out there in the cities and towns across the country. So they’re not even there.

And, as importantly, new agencies like TSA are contracting out

all of their human resource work.

So I would see the need for some kind of an outreach from the

board to agencies and to Human Resources, because there has to

be some face-to-face opportunity for people to ask questions about

these things. They’re very important decisions, and everyone is at

a very different level of what they’re confident in and what they’re

able to absorb to make these choices. Otherwise, they’re going to

stick with the simplest and the most straightforward, and they’re

going to be afraid to take advantage of some of the things that

Congress passed this past summer, because they won’t know how

to do that.

Mr. LYNCH. I am anticipating that, Mr. Long, you have already

thought about this with respect to the Roth IRA and some of the

other things. How are you proposing this rollout? How is this going

to happen?

Mr. LONG. We are actually doing some research on that right

now, trying to figure out what the rest of the world is doing as far

as advertising the Roth 401(k) provision in large 401(k) plans. It

is a complicated choice. You move from just talking about basic investment principles to effectively talking about tax minimization

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strategies. Trying to communicate that to 4.2 million people is

going to be a challenge.

There are mechanisms for how to get that done. Certainly we

will be relying on the Web site. Certainly we will be relying on the

human personnel specialists.

But Colleen Kelley is exactly correct. We know that we work

with the Human Resource professionals, and they’re stretched thin.

And that is a challenge that we work with every day. We work

with OPM as well, because they’re the party that is primarily responsible for making sure that the government has a financial

readiness program. We partner with them, and through them and

the personnel specialists, but there are challenges there.

Ms. BAPTISTE. Federal employees need to hear from professional

financial advisors because, as Ms. Kelley has said, Human Resources staff don’t necessarily have this expertise and they are

stretched beyond all knowledge. They do not have the time to cope

with—they don’t have the time to counsel people who are retiring.

They don’t have the expertise.

I agree, we need a better Web site. We need much more information. It’s a tricky subject.

Mr. COX. Mr. Chairman, I think I would agree with my other colleagues. I believe it is that personal touch. I go back to my own

years working for the Federal Government. I went to Human Resources. I got counseling there. I was one of the first participants

in the TSP back in 1986, and it was because there were HR people

that were present that could sit down and talk to me about it.

And I remember the HR person saying to me, put that 5 percent

right up front, boy, because you will get that matched. But let me

tell you something else; each year when you get a raise, up it another percent, keep going on up, because you will want to retire 1

day, and you have to start preparing early.

I still remember that advice, and it didn’t come from a Web site

or it didn’t come by osmosis. It was a person counseling me, probably not on a printed brochure, but it was very, very sound advice.

Mr. LYNCH. Right. Thank you.

Mr. Connolly, you are now recognized for 5 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman. Mr. Long, are there

differences between CSRS and FERS with respect to TSP?

Mr. LONG. Absolutely, primarily in terms of the government contribution. The CSRS contribution is voluntary. There is no government contribution that goes along with it. For the FERS employees

they have the 1 percent automatic and then the matching contribution in addition.

Mr. CONNOLLY. What is the rationale for differentiating between

the two?

Mr. LONG. The basic annuity.

The annuity for the CSRS is more generous, and for people hired

after 1983 they continue to have an annuity but it is less generous.

And along with that, TSP was created, and they also are eligible

for Social Security. So you have a three-legged stool for those under

FERS.

Mr. CONNOLLY. Have we looked at the actuarial cost of the Roth

conversion that you talked about?

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Mr. LONG. I don’t think I talked about the Roth conversion. I

think the gentleman down at the end of the table talked about the

Roth conversion.

Mr. CONNOLLY. I am just wondering if we have done some cost

estimates of what are the implications?

Colonel HAYDEN. Our organization has done no cost analysis associated with that, again, as we see this as more of a win-win for

both the Federal Government as well as for the members because

the revenues would be coming back to the Federal Government immediately.

That’s the option that we were looking at as having some type

of conversion.

Mr. CONNOLLY. Colonel Hayden, folks in the military, are they

subject to the same kind of rule as CSRS employees with respect

to the match, the 1 percent?

Colonel HAYDEN. It is my understanding they’re more tied toward just the annual contributions, the 16.5 or the 49,000. We do

have the limitation associated with the 49,000 if they happen to be

in a combat zone. So you can take up to that amount on top of the

16.5 if you are in a combat zone, and that was a provision in law.

Mr. LONG. The members of the uniformed services are not eligible for any government contribution, again, with a similar strategy.

They have a pension, a 20-year pension, which is considered to be

attractive and that is their primary source of retirement income.

Mr. CONNOLLY. Are you aware of the fact the ranking member

of this full committee had an amendment that would allow the

military to qualify for a match similar as FERS employees?

Mr. LONG. No, I was not.

Mr. CONNOLLY. It might be worth your costing out the implications of such an amendment .

Mr. LONG. There is one thing that I do need to make sure people

are clear on: that the Roth TSP, which will be similar to a Roth

401(k), that is meaningfully different than a Roth IRA. My understanding is that the IRS does not permit, and we’re aware of no

401(k) plans that permit people to take their 401(k) contributions

and convert them to Roth 401(k) contributions. I believe, according

to the data I got from the IRS, it’s not permissible under tax law.

What is permissible today is conversions of Roth—of regular

IRAs and Roth IRAs. The thinking behind it might be similar, but

inside the qualified plan, it is not permissible today.

Mr. CONNOLLY. Ms. Baptiste, I didn’t ask you for NAR’s position,

but what is NAR’s position on creating new investment windows,

especially maybe a mutual fund window?

Ms. BAPTISTE. We believe it is a little risky without a lot of—

there’s some—people do not have enough information and education. They’re really looking at going into retirement with some

solid money, and this is much riskier.

Mr. CONNOLLY. Thank you. Thank you, Mr. Chairman.

I guess when we look at this kind of issue, we have to balance

the rights of individual members to take risks with their own

money. On the other hand, when we are looking at something that

is a retirement fund, we have to balance that out.

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ment and allowing folks to invest in the market because it would

grow so much more healthy. Of course, had folks done that, the

weeping and gnashing of teeth in the opening of those 401(k) statements today would be magnified by many fold, and an awful lot of

folks would find their retirement security in jeopardy. So it is a

very serious policy question and one I know we will be debating for

some time.

I thank you all.

Mr. LYNCH. I know some of this sounds paternalistic or maternalistic that we’re trying to protect some of the participants here.

But I think that we have to realize that if you do something—let

us take the mutual fund window piece of this. It’s not just that participants going out through the window, it is retirees being

bombarded with marketing information that might be more driven

by profit and fees than by best serving the retirement needs of the

individual. So I am concerned about that.

Colonel, I want to ask you, you’ve got flag officers, you’ve got

field officers, you’ve got junior officers versus noncommissioned officers. The education piece, this has to be considerably more complex

in your situation as opposed to an agency. You’ve got folks in much

different circumstances. Do you have any specific concerns about

being able to go out and educate?

I have been in Iraq and Afghanistan so many times, and those

folks are on the Internet all the time. They’re on more than I am,

and much more savvy than I am in that respect. But you’ve got

such a wide diversity of position and circumstances, as well as financial education within the group that you represent.

Colonel HAYDEN. It is an interesting scenario. When the actual

TSP option was first offered to the uniformed services, I was actually at the Pentagon at the time in a role of sitting in the J–1, trying to figure out exactly what this TSP option was going to provide.

So the education piece was even critical when we first had the option of participating.

This now provides even a broader base, depending on your financial situation, depending what your tax bracket is going to be. It’s

going to be even more critical for a junior troop to have an understanding of what they intend to have as their taxable income in retirement compared to their taxable income that they’re currently

looking at.

And then when you throw in that some of these folks are deploying into the combat zone, getting tax-free benefits as it is associated with it, how generous that can actually be when it comes to

actually just contributing to the TSP, its important.

What took place then, and what I would hope will take place before the rollout of the Roth option, is that the services will do, once

again, we call them road shows. We would take our HR personnel,

get them smart on the issue, go out and have mandatory fund—

mandatory formations, where you would have to go out and get the

briefing, so that you had an understanding of exactly what this was

being provided to you. And we have that option with the uniformed

services to do something just like that.

The Web site is going to be critical, because as you say, the

younger troops today, they live on it. They understand it, they go

out there, they do their research and that’s how they find the inforVerDate 11-MAY-2000 16:14 Mar 22, 2010 Jkt 000000 PO 00000 Frm 00093 Fmt 6633 Sfmt 6633 U:\DOCS\54697.TXT KATIE PsN: KATIE
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mation. The older horses like myself, it was a little bit more difficult for me to get an understanding of contributing. But when I

did have that HR person sit down with me and said, start out with

the 1 percent growth each year, every time you get a promotion,

every time you get a change in pay associated with the way you

are doing business. If you get flight pay increases, put a portion of

that into your TSP account. Save for yourself, save for your future.

That’s how we did the business, but you had to have that one-onone.

Mr. LYNCH. I appreciate that, and I think this hearing has certainly elicited some of the conflicts here. So while I said at the outset I am very happy with the TSP, we need to move forward and

we are. But I think we have to do so with a certain degree of caution as to the interests of the people that we all represent, these

participants now and in the future.

But I want to thank you very much for your willingness to come

before the committee and help us with our work. We have benefited

greatly by your perspectives and your recommendations. I can’t

guarantee that you won’t be asked to appear here again, maybe

around the time that we are rolling this out, so we can keep a closer tab on things and maybe respond to some of the issues that

you’ve raised here today.

But thank you very much for your participation, and you’re free

to go. The hearing is now adjourned.

[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]

[The prepared statements of Hon. Jason Chaffetz, Hon. Elijah E.

Cummings, and Honl. Gerald E. Connolly, and additional information submitted for the hearing record follow:]

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