US Thrift Plan Board Objects To Pension Decision Changes
Monday June 30th, 2008 / 23h54
By Christina M. Wright Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The head of the Federal Retirement Thrift Investment Board Monday denounced a legislative plan to eliminate Congress' role in approving investment choices for a major federal savings plan. "It would be a big mistake" to give the board full responsibility for investment choices, Federal Retirement Thrift Investment Board Chairman Andrew Saul said at a meeting in Washington. The investment board administers the Thrift Savings Plan - a large, 401(k)-like retirement savings plan, with assets of $234 billion, for more than 3.9 million federal employees. The legislative proposal to eliminate Congress' role in the investment options process is one part of a broad House Committee on Oversight and Government Reform draft plan. It also would allow federal workers to enroll automatically in the savings program. It also would create a Roth contribution program option and a self-directed option for participants. In a letter to the TSP board, the House committee said it does "recognize that the law creating the TSP was enacted over 20 years ago and has been only infrequently updated." Currently, the board researches investments for the TSP, meets with union representatives from the Employee Thrift Advisory Council, and then proposes the new investment plan to Congress. Congress then approves the proposed investment. Employee Thrift Advisory Council Chairman James Sauber touted the current structure as one that allows for checks and balances. Under the draft provision, the TSP board would be able to change investment plans as long as the changes fell in line with a set of criteria aimed at ensuring that employee offerings are low-cost and beneficial, for instance. They would then advise Congress about the change through written notice, and enact the change 90 days later. Both advisory boards said the Roth program needs further review. It requires the initial contributions to the fund are taxed, allowing for the funds to grow tax-free and to be withdrawn tax-free. The idea is that participants would save money by paying lower taxes at the front-end, instead of the higher taxes on the back-end. Meanwhile, the costs of the program, estimated to be in the millions, concerned both boards. Educating employees about the new program would be the largest expense. The board also discussed allowing spouses of deceased account holders to take over the deceased's accounts. Additionally, it talked about plans to update TSP systems and security. -By Christina M. Wright, Dow Jones Newswires; 202-862-6687; christina.wright@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=3lGBWWahUFfXD%2FiXfjAf1g%3D%3D. You can use this link on the day this article is published and the following day.
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