TSP fund balance crosses $250 billion

Monday - 4/19/2010, 8:00pm EDT

Tom Trabucco, Federal Retirement Thrift Investments Board

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By Dorothy Ramienski
Internet Editor
Federal News Radio

For the first time, the Thrift Savings Plan's fund balance has crossed a quarter of a trillion dollars.

The Federal Retirement Thrift Investments Board held its monthly meeting, and Director of External Affairs Tom Trabucco explained what this means for TSP investors.

"The TSP is still growing in dollars and in terms of membership, so any of your costs are spread over a wider number of people, and that helps keep your costs down. It also means that we're in a grow mode here at the TSP still, even though we're 23-years-young."

Trabucco said that over 20,000 members of the uniformed services have joined the TSP in the past month. In addition, more participants are investing in the L funds.

There are now 680,000 in those funds alone, with 12 percent of all money invested by FERS employees and 17 percent of all funds invested by uniformed service members solely in L funds.

Those numbers will only continue to grow.

Automatic enrollment begins for the TSP in August, and Traubucco said the Board is preparing to see participation escalate.

Participation numbers aren't the only aspect where change is anticipated. Executive Director Greg Long reported at the meeting that the TSP's new website is moving forward, though the project has faced some challenges.

"We lost a couple of weeks due to procurement issues on contracting for what's called load testing. We need to be sure that when we open up this new website, that we can handle the big volume of users that we expect. . . . So, we just got to run testing to make sure that we can handle 'x' times the normal value. . . . We've got a website that functions perfectly well right now and we don't want to give that up until we are sure that we have the new one in place. The content is good. It's simply a question of being sure that we're able to handle this 'x' times normal volume load."

Trabucco said the Board still anticipates May 31 as a rollout for the new site. He said this date might get pushed back into June, depending on how the load testing goes.

In addition to the discussion about the new site, Board members discussed the end-of-quarter review of investment performance and tracking errors. Trabucco noted that this is routine.

"People may not even realize that [we] do this because we've been so steady on our investment policies. But they are looked at very carefully. Every month we take a look at performance, but then every quarter we review and the Board members ask a lot of questions about all the details of investing."

The members examine topics such as variations, tracking errors and why those tracking errors occurred. The staff then answers the questions and the Board members decide whether or not they want to proceed with the status quo.

At the meeting this morning, Trabucco said all Board members were satisfied and will change nothing right now.

As for tracking errors, he explained that they can occur in a number of ways, but gave one example:

"Let's say that the S&P 500 loses a couple of companies and they're replaced by new companies that S&P decides to bring into the Index. Well, the old companies that are there have to be sold off, and that's done a bit at a time. Then, they have to pick up the new companies, as well. That will throw your tracking off. What you try to do is have no tracking error."

Trabucco said the TSP did see some tracking errors this time around, but they were very small. Regardless, he said, the Board looks at any variation carefully.

"We do bring it down to that level to make sure we understand where all of these deviations come from."