    Federal Thrift Savings Plan: Customer Service Practices Adopted
    by Private Sector Plan Managers Should Be Considered (18-JAN-05,
    GAO-05-38).

    Intended to resemble private sector 401(k) pension plans, the
    federal government's Thrift Savings Plan (TSP) held more than
    $128 billion in retirement assets for over 3 million participants
    at the end of 2003. Customer service-related difficulties during
    the Federal Retirement Thrift Investment Board's (TSP's governing
    body) record-keeping system conversion in 2003 led the Chairman
    of a Senate Committee to ask GAO to examine the customer service
    provided to TSP participants. This review describes (1) customer
    service provisions within TSP and those offered by private sector
    managers and (2) customer service practices used by private
    sector plan managers that could be considered for use in TSP.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-38
        ACCNO:   A15756
      TITLE:     Federal Thrift Savings Plan: Customer Service Practices
    Adopted by Private Sector Plan Managers Should Be Considered
         DATE:   01/18/2005
      SUBJECT:   Federal employees
    	     Retirement benefits
    	     Retirement pensions
    	     Customer service
    	     Private sector
    	     Private sector practices
    	     Comparative analysis
    	     Quality assurance
    	     Federal Thrift Savings Plan

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    GAO-05-38

    United States Government Accountability Office

      GAO	Report to the Chairman, Committee on Homeland Security and Governmental
                                  Affairs, U.S. Senate

    January 2005

    FEDERAL THRIFT SAVINGS PLAN

      Customer Service Practices Adopted by Private Sector Plan Managers Should Be
                                       Considered

    GAO-05-38

    [IMG]

    January 2005

    FEDERAL THRIFT SAVINGS PLAN

    Customer Service Practices Adopted by Private Sector Plan Managers Should Be
    Considered

      What GAO Found

    TSP managers and private managers (servicing multiple pension plans)
    enable participants to select their preferred means of customer service
    from a similar range of options--such as telephone, Web sites, and on-site
    representatives--but each emphasizes different approaches. Both TSP and
    private plan managers provide customer service through automated telephone
    assistance as well as live representatives located at call centers. Both
    TSP and private managers also use standards to measure the efficiency and
    effectiveness of their call centers. However, TSP managers emphasize the
    efficiency of call centers based on quantifiable standards, such as the
    time it takes to respond to incoming calls, while private plan managers
    place a greater emphasis on the policy of satisfying each customer's needs
    in one call. Both TSP and private sector plan managers also use Web sites
    to deliver plan information and allow participants to conduct personal
    transactions, and private plan managers emphasize the use of their Web
    sites as the primary vehicles for delivering retirement education and
    information to participants. Finally, while TSP managers said that agency
    representatives serve as the initial contact points for TSP employees to
    learn about TSP and receive counseling, private plan managers use on-site
    representatives less to supplement services provided by call center
    representatives and Web-based resources.

    Private sector plan managers we contacted have adopted various other
    practices that are not featured within TSP, such as regularly assessing
    customer satisfaction and using regularly updated technology to improve
    customer service. These managers gather participant feedback on their
    voice response system via short, automated surveys at the end of
    participants' calls and use short, on-the-spot surveys to gather
    information on participants' experience with their Web site. These plan
    managers emphasized the importance of incorporating participant feedback
    into their customer service delivery model in order to better meet the
    needs of their participants. Although TSP managers have surveyed
    participants in the past, they do not have a systematic approach to assess
    whether their customer service meets participants' needs. TSP managers
    rely largely on indirect feedback from customer service staff, agency
    coordinators, and others who respond to complaints or requests for
    assistance from participants. The privately managed plans we studied also
    appear to utilize more up-to-date technologies to provide customer
    service, such as allowing participants to create account statements for
    any period of time or offering seminars over the Web on different plan
    topics that participants can access anytime. The TSP Web site provides
    fewer options and relies more on basic features.

                     United States Government Accountability Office

    Contents

      Letter

    Results in Brief	Background	TSP and Private Sector Plan Managers Provide a
    Similar Range of

    Customer Service Options but Emphasize Different Approaches Private Sector
    Plan Managers Have Adopted Various Practices That

    TSP Managers Could Consider to Improve Customer Service Conclusions
    Recommendations for Executive Action Agency Comments and Our Evaluation

                                           1

                                          3 5

                                           7

    15 19 20 21

    Appendix I Scope and Methodology

    Appendix II	Comments from the Federal Retirement Thrift Investment Board

      Figure

                        Figure 1: Plan Service Provision Options

    Abbreviations

    ETAC Employee Thrift Advisory Council	FERSA Federal Employees' Retirement
    System Act 	NFC National Finance Center	OPM Office of Personnel
    Management	PSR Participant Service Representative	TSP Thrift Savings Plan

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office Washington, DC 20548

    January 18, 2005

    The Honorable Susan M. Collins 	Chairman 	Committee on Homeland Security
    and Governmental Affairs 	U. S. Senate

    Dear Chairman Collins:

    Since its inception in 1986, the federal government's Thrift Savings Plan
       	(TSP) has become a central component of federal employees' retirement
       	savings. Intended to resemble private sector 401(k) pension plans, TSP
       	held more than $128 billion in retirement assets for about 3.2
    million	participants and has become one of the largest retirement plans in
    the 	United States.1 TSP resembles private sector 401(k) pension plans in
    that 	both allow employees to contribute a portion of their
    current	compensation through payroll salary deductions and invest their
    account	balances among a menu of investment options selected by the
    employer.2	Under pressure to provide plan features and customer service
    that are 	more consistent with those of large private sector plan
    managers,3 in 2003 	TSP managers launched a new record-keeping system
    designed to allow 	improved service to plan participants.4 After
    experiencing problems with

    1Assets and participants are as of December 31, 2003.

    2As provided under 26 U.S.C. 401(k) of the Internal Revenue Code, certain
    defined contribution plans allow employees to reduce a portion of their
    current compensation via a contribution, on a pretax basis, to a qualified
    retirement account. Generally, there are two types of pension plans:
    defined benefit plans and defined contribution plans. A defined benefit
    plan promises a benefit that is generally based on an employee's salary
    and years of service. The employer is responsible for funding the benefit,
    investing and managing plan assets, and bearing the investment risk. In
    contrast, under a defined contribution plan, benefits are based on the
    contributions to and investment returns on individual accounts, and the
    employee bears the investment risk.

    3Customer service for many private and public sector defined contribution
    plans is delivered by a private sector "plan manager" that is hired by the
    company that is offering the defined contribution plan to its employees
    (the plan sponsor). These private sector managers typically handle all of
    the plan's customer service-related activities in addition to the plan's
    record-keeping activities. Most private sector plan managers provide
    services to several different plan sponsors.

    4Record keeping includes, but is not limited to, activities such as
    posting contributions to participant accounts, adjusting account balances
    for gains and losses, and processing loans and withdrawals.

    system access, customer assistance, and transaction processing during
    implementation of this new system, TSP managers have reported that the
    plan now processes more transactions more efficiently and with more
    participant control than in the past.5 However, the difficulties of
    implementing the new record-keeping system and the problems that ensued
    led plan participants and members of Congress to raise questions about the
    overall level of customer service at TSP. In light of these questions, the
    Chairman of the Senate Committee on Homeland Security and Governmental
    Affairs asked GAO to examine the customer service provided to TSP
    participants. This review describes (1) customer service provisions within
    TSP and those offered by private sector managers and (2) customer service
    practices used by private sector plan managers that could be used to
    improve TSP's service.

    To describe customer service in TSP, we interviewed officials from TSP and
    the National Finance Center (NFC), reviewed documentation governing TSP's
    customer service operations, and observed TSP operations.6 To describe how
    private sector plan managers provide customer service and identify
    practices that might prove useful to TSP, we interviewed five managers of
    plans representing an average of 4.9 million participants and an average
    of $169.8 billion in plan assets,7 observed the managers' customer service
    operations, and obtained documentation of their operations where
    possible.8 We conducted our work between December 2003 and December 2004
    in accordance with generally accepted government auditing standards.
    Appendix I describes the scope and methodology of our work in greater
    detail.

    5Federal Retirement Thrift Investment Board, TSP's governing body, still
    seeks to offer new features. For example, TSP managers reported that they
    began providing toll-free telephone service in July 2004, to enable TSP
    participants and beneficiaries to obtain account or transaction
    information via the ThriftLine's automated telephone service 24 hours a
    day, 7 days a week.

    6The Department of Agriculture's National Finance Center has been the
    major contractor for account maintenance and participant support since TSP
    began operations in 1987.

    7We selected 4 of the top 10 private sector plan managers and one of the
    top three local government agency plans based on total plan assets under
    management as of December 31, 2002. See appendix I for more detail.

    8Most of the private sector plan managers that we spoke with serviced from
    several hundred plans to several thousand different plans. We also
    interviewed the managers of one large self-managed public sector plan. See
    appendix I for more detail.

      Results in Brief

    TSP and private sector plan managers enable participants to select their
    preferred means of customer service from a similar range of options- such
    as telephone, Web sites, and on-site representatives-but each emphasizes
    different approaches. Both TSP and private plan managers use the telephone
    to provide customer service through automated telephone assistance as well
    as live representatives located at call centers. TSP and private plan
    managers also both use standards to measure the efficiency and
    effectiveness of their call centers. However, TSP managers emphasize the
    efficiency of call centers based on quantifiable standards, such as the
    time it takes to respond to incoming calls, while private plan managers
    place a greater emphasis on the policy of satisfying each customer's needs
    in one call. Both TSP and private sector plan managers also use Web sites
    to deliver plan information and allow participants to conduct personal
    transactions, and private plan managers emphasize the use of their Web
    sites as the primary vehicles for delivering retirement education and
    information to participants.9 Finally, while both TSP and private sector
    plan managers use on-site coordinators to provide plan information, this
    customer service function is more heavily emphasized in TSP. TSP managers
    said that agency representatives serve as the initial contact points for
    actively employed TSP participants to learn about TSP and receive
    counseling. Private sector plan managers use on-site representatives less
    and do so to supplement services provided by call center representatives
    and Web-based resources.

    Private sector plan managers we contacted have adopted various other
    practices that are not featured within TSP, such as regularly assessing
    customer satisfaction and using regularly updated technology to improve
    customer service. These managers gather participant feedback on their
    voice response systems via short, automated surveys at the end of
    participants' calls and provide links on their Web sites to gather
    information on participants' experience with their Web site. These plan
    managers emphasized the importance of incorporating participant feedback
    into their customer service delivery models in order to better meet the
    needs of their participants. Although TSP managers have surveyed
    participants, they have not done so since the early 1990s and do

    9In the federal retirement system, the Office of Personnel Management
    (OPM), rather than TSP, is required to establish a training program for
    all retirement counselors. However, the Board has responsibility for
    providing information to plan participants to facilitate informed decision
    making with respect to what level of contribution to make and how to
    invest those contributions. See GAO, Thrift Savings Plan, HEHS-96-66R
    (Washington, D.C.: Nov. 14, 1995).

    not have a systematic approach to assess whether their customer service
    meets participants' needs. TSP managers rely largely on indirect feedback
    from NFC and TSP staff and others who respond to complaints or requests
    for assistance from participants, such as agency coordinators. The
    privately managed plans we studied also appear to utilize more up-to-date
    technologies to provide customer service, such as allowing participants to
    create account statements for any period of time or offering seminars over
    the Web on different plan topics that participants can access anytime. The
    TSP Web site provides fewer options and relies more on basic features.

    This report contains recommendations to the Federal Retirement Thrift
    Investment Board (the Board) concerning actions needed to identify
    potential areas of improvement in the customer service provided to TSP
    participants by developing and implementing an evaluation effort to assess
    the level of customer satisfaction and routinely surveying the largest
    private sector plan managers to keep up with current industry trends. We
    recommended that the Board (1) develop a systematic evaluation effort,
    including broad survey methods that are supplemented by other efforts to
    randomly survey TSP participants, to assess their overall level of
    satisfaction with the services provided and (2) institutionalize the
    routine collection of information to regularly and systematically assess
    trends and innovations in the defined contribution industry. The Board
    disagreed with our first recommendation because it had previously
    announced its intention to survey TSP participants on a variety of topics,
    including client satisfaction. However, in its February 2004 monthly
    meeting, the Board said that such a survey would not be conducted for at
    least another 2 years. As we state in this report, the private sector plan
    managers that we spoke with believe that direct, ongoing participant
    feedback is needed to respond to the changing needs of plan participants.
    Without obtaining more frequent feedback from participants, TSP managers
    cannot determine what improvements would best satisfy participants' needs.
    Therefore, we continue to believe that the Board needs to develop and
    implement an ongoing evaluation effort that includes different types of
    surveys to systematically assess the level of customer satisfaction. The
    Board also disagreed with our second recommendation because it has
    conducted and will continue to conduct on-site reviews of the largest
    private plan managers to determine the services they provide and the
    technological capabilities they plan for the future. While the Board's
    recent visits to such plan managers are a positive step, we continue to
    believe that a routine and systematic effort to collect information on the
    practices used in the private sector customer service industry and assess
    their potential for use in TSP should be institutionalized as a regular
    aspect of TSP's operations.

    Background

    The Federal Employees' Retirement System Act of 1986 (FERSA)10 created the
    Thrift Savings Plan as one of the basic elements of a new retirement
    system for federal workers to, among other purposes, provide options for
    retirement planning and encourage personal retirement savings among the
    federal workforce.11 Most federal workers are allowed to participate in
    TSP, which is available to federal and postal employees, members of
    Congress and congressional employees, members of the uniformed services,
    and members of the judicial branch. Eligibility depends upon coverage
    under the Federal Employees' Retirement System or the Civil Service
    Retirement System and civilian or military status.12

    Eligible federal employees are able to contribute up to a fixed percentage
    of their annual base pay or a flat amount subject to IRS limits.
    Additionally, certain participants are eligible for automatic 1 percent
    contributions and limited matching contributions from the employing
    federal agency. TSP provides federal (and in certain cases, state) income
    tax deferral on employee contributions and their related earnings, similar
    to those offered by many private sector 401(k)-type pension plans.13 As
    with a 401(k) plan, participants are able to contribute a portion of their
    basic salary into an individual tax-deferred account. Participants have
    the ability to manage their accounts and conduct a variety of transactions

    10Pub. L. No. 99-335, June 6, 1986.

    11FERSA created the Federal Employees' Retirement System (FERS), a
    three-part retirement system for federal employees, including enrollment
    in Social Security, a defined benefit plan, and TSP, a defined
    contribution plan.

    12Civil Service Retirement System (CSRS) is a retirement plan for federal
    employees and covers employees hired prior to January 1, 1984. It is a
    defined benefit plan, a plan that specifies the benefit to be received at
    retirement by the participant.

    13Participants may allocate their contributions and any associated
    earnings among five investment fund options: the G Fund, F Fund, C Fund, S
    Fund, and I Fund. The G Fund, managed by the Board is comprised of
    short-term nonmarketable government securities issued exclusively for the
    Thrift Savings Fund. The remaining four funds are managed by Barclays
    Global Investors and are structured to track large index funds, which are
    debt or equity portfolios comprised of bonds or stocks of a large number
    of different companies. The first of these funds, the Fixed Income Index
    Investment Fund, or F fund, is a bond market fund primarily invested in
    the Barclays U.S. Debt Index designed to track the Lehman Brothers U.S.
    Aggregate Index. The second fund, the C Fund, is TSP's largecompany stock
    fund. It is invested in the Barclays Equity Index Fund and tracks the
    Standard & Poor's 500. The Small Capitalization Stock Index Investment
    Fund, or S Fund, is invested in Barclays Extended Market Index Fund and is
    managed to track the Wilshire 4500. The I Fund is the TSP's international
    stock index fund and is invested in Barclays EAFE Index Fund (Europe,
    Australasia, and Far East) and holds shares of major companies and
    industries in the European, Australian, and Asian stock markets.

    similar to those available to 401(k) participants, such as reallocating
    contributions, borrowing from the account, making withdrawals, or
    purchasing annuities.

    Administration of TSP falls under the purview of the Federal Retirement
    Thrift Investment Board, an independent agency in the executive branch
    established by Congress under FERSA. This five-member, presidentially
    appointed Board's primary responsibilities include establishing policies
    for the investment and management of TSP. In addition, the Board must
    manage the Thrift Savings Fund solely in the interest of the participants
    and beneficiaries of TSP, as well as create administrative policies for
    the TSP. In addition to assigning these broad duties, FERSA also charges
    the Board with appointing an Executive Director and an Employee Thrift
    Advisory Council (ETAC).14 The Executive Director and staff are
    responsible for implementing the Board's policies and managing the
    dayto-day operations of TSP, prescribing regulations to administer FERSA,
    and other duties. The Employee Thrift Advisory Council advises the Board
    and Executive Director on matters relating to the investment and

    15

    administration of TSP.

    While the Executive Director has responsibility for establishing and
    maintaining TSP participant accounts, these account record-keeping
    services are currently performed primarily by the U.S. Department of
    Agriculture's National Finance Center under a contractual agreement with
    the Board. Through this agreement, the TSP service office of NFC is
    responsible for updating participants' accounts based on data provided by
    agency payroll offices, processing participant account transactions, and
    providing customer service support related to these functions.

    Federal agency payroll and personnel offices also play a role in the
    administration and customer service activities of TSP. These offices are

    145 U.S.C. 8474 (a)(1) and 5 U.S.C. 8473 (a).

    15The Employee Thrift Advisory Council is comprised of 15 federal
    employees and consists of four members representing the four largest labor
    unions; six representing labor, managerial, and supervisory organizations
    in the U.S. Postal Service; one representing employee organizations having
    the purpose of promoting the interests of women in government service; one
    from the organization with individuals receiving the largest number of
    annuities under FERS or CSRS; one from the organization representing the
    largest number of supervisors and management officials; one representing
    the agency with the largest number of members of the Senior Executive
    Service; and one from the uniformed services. (5 U.S.C. 8473 (b)).

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

    responsible for helping new employees enroll in TSP when they are hired
    and assisting existing employees make changes during designated semiannual
    seasons called open enrollment periods. They also retain control of
    administrative functions affecting employee payroll deductions, such as
    the election and alteration of contribution percentages. Additionally,
    FERSA requires TSP to provide information to employees participating in
    TSP and requires the Office of Personnel Management to establish a
    training program for all retirement counselors of federal agencies.16

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

    165 U.S.C. 8432; 5 U.S.C. 8432(b); and 5 U.S.C. 8350.

    Figure 1: Plan Service Provision Options

    aOnly actively employed Thrift Savings Plan participants have access to
    on-site agency representatives. Also, not all private plan managers offer
    on-site representatives.

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

    TSP managers provide an automated, toll-free telephone system and call
    center staff that help answer participants' questions, and TSP managers
    measure the efficiency of the call centers based on quantifiable
    standards, such as the time it takes to respond to incoming calls. TSP's
    automated telephone system, known as the ThriftLine and operated by the
    National Finance Center, allows participants to access general plan
    information, including share prices, rates of return, current loan
    interest rates, current annuity interest rates, and plan news.17 In
    addition to obtaining general

    17According to TSP managers, the ThriftLine receives an average of about
    17,000 phone calls per day.

    plan information, participants can gain access to the ThriftLine system to
    get personal account information, such as their account balance and how
    they are allocating their contributions, or to manage their account, such
    as by making interfund transfers or withdrawals. Participants can also use
    the ThriftLine system to reach a TSP call center representative.

    TSP managers also maintain a call center where participants can reach
    service representatives; these representatives answer participants'
    questions and can also help them make changes to their accounts. About 155
    call center representatives field incoming telephone calls and answer
    participants' questions about loans, allocation changes, interfund
    transfers, and withdrawals.18 In addition to answering participants'
    questions, these call center staff also register requests for assistance
    and complaints in a record-keeping system, which allows supervisors or
    lead analysts to review such comments and respond to participants to help
    them resolve problems. Call center staff said participants most commonly
    call to ask questions about loans or withdrawals. The staff also indicated
    that in the past participants with loans were more likely than others to
    call back seeking more help.

    Recently, the Board has taken a number of steps to improve telephone
    service to TSP participants. These included establishing an additional
    call center to reduce service interruptions and providing toll-free
    telephone service to facilitate participant access to service
    representatives. The new call center, located in Cumberland, Maryland,
    opened in July 2004 to complement the center located in New Orleans,
    Louisiana, during normal operations and provide backup during
    weather-related or other local events that could otherwise interrupt
    service. Also in July 2004, the Board began providing toll-free telephone
    service to TSP participants where participants will be able to obtain TSP
    account or transaction information via the automated telephone service 24
    hours a day, 7 days a week.

    TSP managers emphasized the efficiency of call centers based on
    quantifiable standards-such as the percentage of calls that are answered
    within a specified time frame-and pointed to their performance on these
    measures as evidence of call center productivity. For example, the TSP

    18TSP has two call centers. The call center located in New Orleans,
    Louisiana, receives approximately 8,500 telephone calls per day from TSP
    participants and has about 100 call center representatives answering calls
    daily. The new call center located in Cumberland, Maryland, which is
    operated by Spherix Inc., has about 55 call center representatives
    answering calls daily.

    call center tries to answer at least 90 percent of calls within 20 seconds
    of a participant calling. TSP was meeting this standard in 2003 prior to
    the implementation of the new record-keeping system and has since begun
    meeting it again.19 However, TSP failed to meet this standard for about a
    10-month period (May of 2003 through February 2004), when it was
    experiencing an increase in the volume of calls received prompted by the
    implementation of the new record-keeping system. Finally, TSP also closely
    monitors the percentage of callers who hang up before receiving service
    (known as the call abandonment rate) and the average call length as a
    measure of service, and each call center representative is required to
    help an average of at least 50 participants per day.20 TSP managers said
    that resolving the participant's concern on the first call is also a goal,
    and they have enlisted the help of a private sector contractor to make
    changes to improve the quality of their call center processes and are
    developing new standards for call center representatives.

    Private sector plan managers also provide caller assistance through
    automated toll-free telephone systems and live service representatives.
    Some of these managers have more than one defined contribution plan under
    their management and provide unique toll-free numbers for each plan.
    Participants complete a log-in process that routes them to an automated
    menu unique to their particular plan-a system similar to that provided by
    the ThriftLine. From this menu, participants can then check their account
    balances, get price quotes, receive plan information, and process account
    transactions. These automated customer service lines also give
    participants the option of speaking to a live call center representative
    who can provide assistance with transactions or answer their questions. In
    addition to providing basic assistance, service representatives use the
    call as an opportunity to direct participants to educational and plan
    materials available on their Web site.

    While private managers used similar means as TSP to provide caller
    assistance, they emphasized different types of standards than TSP when
    evaluating the success of their call centers. Private managers told us
    that they downplayed the importance of quantitative measures and instead
    focused on ensuring that service representatives fully satisfied each

    19We did not assess the reliability of the call center data. See the
    section on scope and methodology in appendix I.

    20Calls averaged about 3 minutes and 21 seconds plus about 1 minute and 45
    seconds for service center representatives to record their notes.

    customer's needs efficiently and politely in one call. Specifically,
    private sector managers emphasized this policy of first-call resolution as
    an overriding goal and said they viewed quantitative measures, such as
    those emphasized by TSP, as secondary or, in some cases, an inaccurate
    measure of call center performance. For example, while TSP keeps close
    watch on the call abandonment rate, private managers we spoke with placed
    little emphasis on this measure. In fact, one plan manager told us he
    believed the call abandonment rate to be an inaccurate measure of
    productivity, as some participants terminate calls after opting to visit
    the Web site in response to the telephone recording they hear while on
    hold. Furthermore, unlike TSP managers, who evaluate service
    representative utilization by representatives' ability to answer a minimum
    number of calls each shift, private managers we spoke with did not have
    required call minimums, instead stressing that service representatives
    should fully resolve each participant's needs, regardless of the time
    required. Finally, although private managers had requirements-such as
    answering 90 percent of calls within 20 seconds-specified in the contracts
    with their clients, they did not use such measures as the primary standard
    for evaluating service representatives or call center
    effectiveness.However, we did not attempt to assess the possible impact of
    these differences on the quality of customer service.

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

    TSP managers also provide customer service through their Web-based
    transaction system. TSP's Web site is maintained and operated by TSP staff
    and according to TSP managers has received an average of about 15.7
    million hits per month and processed an average of 216,696 transactions
    per month during the first 8 months of 2004. Participants can use the Web
    site for functions such as accessing plan information, making loan
    requests, downloading forms, transferring funds, changing allocations
    between funds, and accessing account balances, among other things.
    Participants can also conduct many of these transactions over the phone,
    but by using the Web site, participants can also make a loan request and
    can submit the form online for quicker processing.

    According to TSP managers, the Web site has to a great extent replaced
    paper forms for processing transactions and providing information. For
    example, 93 percent of interfund transfers were conducted through the Web
    site during the first 8 months of 2004. TSP managers also said that they
    have eliminated paper versions of forms, statements, and bulletins that
    have traditionally been provided through the mail or sent to agency
    coordinators because most of these documents can be obtained through

    the Web site. TSP managers stated that their goal in doing so is to
    improve their level of service while decreasing costs.21

    Private sector plan managers that we spoke with said that in addition to
    providing a means for participants to process transactions, they also
    intend their Web sites to be the primary vehicles for delivering
    retirement education and information to their participants. Like TSP
    managers, private managers said they allow participants to conduct
    different transactions, check account balances, and receive plan
    information electronically. One plan manager that we spoke with said that
    his Web site processed approximately 9 million transactions per month in
    2003.

    In addition, we found that private sector Web sites provided a range of
    resources for participants, from Web-broadcast seminars to downloadable
    brochures and general investment information, and most private plan
    managers underscored the importance of the Web site as a tool that allows
    participants to access information on their own. One manager told us that
    his goal is not only to educate participants but also to influence
    participant behavior by strategically placing educational information on
    the Web site so as to link such educational materials to the topic or
    transaction a participant is pursuing. For example, the plan manager said
    that research has found that most participants visited the site for
    information on their account balance or personal rate of return, not to
    seek out educational materials. In response to findings about participant
    Web usage, the plan manager redesigned the site so that educational
    materials are embedded in relevant pages of the site, rather than isolated
    on a separate page. In contrast, TSP separates all plan and retirement
    information from account and transaction access.

    21In the past, TSP managers automatically mailed paper statements to 3.25
    million participants four times per year. To reduce costs, in 2003, TSP
    managers announced that they would send paper statements only if
    participants requested them. Since then, only 473,000 participants have
    requested to continue receiving paper statements, saving $3.3 million
    dollars per year in administrative costs.

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

    Designated by their federal agencies as liaisons with TSP managers, agency
    coordinators provide customer service to participants within their
    particular agencies. Agency coordinators, who are typically located in
    their agencies' personnel or benefits offices, are the primary contacts
    for actively employed TSP participants. Generally, agency coordinators are
    expected to inform eligible employees of TSP options and benefits;
    maintain supplies of TSP forms and informational materials; collect,
    process, and submit TSP election forms to agency payroll offices; and
    respond to inquiries from active employees.22 For some agencies, the
    coordinator's responsibilities are combined with those of the agency
    retirement counselor.23 FERSA authorizes agencies to designate retirement
    counselors who are responsible for providing employees with benefits
    information and mandates that OPM establish a training program for these
    retirement counselors.24 Agencies, however, have primary responsibility
    for designing and implementing their programs according to agencyspecific
    needs.

    TSP managers said that the coordinators are the front line of TSP's
    customer service operations. However, they also said that they lack the
    authority to monitor how frequently, at what point, and for what purpose
    coordinators contact participants. TSP managers view their role in
    providing customer service through agency coordinators as limited
    primarily to assisting these coordinators by distributing information and
    answering questions as they perform their TSP-related duties. The agency
    coordinators we spoke with said they were responsible for providing
    information on TSP to new employees, providing employees information on
    open season enrollment, conducting retirement seminars, helping with
    payroll issues, and answering any questions that employees may have about
    TSP.

    We found that the information and assistance provided to employees by
    coordinators in different agencies varied. For example, when we spoke with
    nine agency coordinators from large and small agencies, three

    22Department of Labor's audit guidelines, Nov. 1, 2001. Section 8477(g) of
    FERSA, directs the Secretary of Labor to establish a program to carry out
    audits to determine the level of compliance with the act's fiduciary
    standards. To guide the auditors, the department has developed a fiduciary
    oversight program that uses detailed guides to test for compliance.

    23Agencies generally refer to retirement counselors and other retirement
    education staff as benefits officers, according to 5 U.S.C. 8350.

    245 U.S.C. 8350.

    coordinators told us that they had requested TSP staff to conduct seminars
    at their agencies to provide information on TSP and retirement planning.
    Of the six other coordinators that we spoke with, all but one said they
    conducted their own seminars or used an outside contractor. The agency
    coordinators said they also distribute information electronically or
    through posted bulletins, informational meetings, orientation sessions,
    and fliers in office mail. Several coordinators indicated that they refer
    participants to the TSP Web site or the ThriftLine to obtain plan
    information or to conduct transactions. The coordinators themselves
    receive guidance and new information on TSP from TSP managers by attending
    optional quarterly meetings and coordinator training sessions that are
    offered monthly and reading TSP bulletins-monthly publications that
    provide recent information on the TSP and are available to agency
    coordinators through the TSP Web site and the mail. The agency
    coordinators we spoke with indicated that they had other responsibilities
    in addition to their TSP-related duties.

    Private sector plan managers rely on on-site representatives less and tend
    to deliver educational and transaction resources directly to participants.
    As a result, plan managers view call center representatives, automated
    telephone services, and Web sites as their front line of customer service
    operations. This emphasis on self-service results in these managers
    providing all available plan information and retirement education through
    one or more of these service delivery methods and using on-site
    representatives only as a backup measure or not at all. Private sector
    companies have been moving away from face-to-face service delivery
    approaches and toward live telephone assistance to meet consumers'
    expectations for fast and convenient service and to provide this service
    more cost-effectively.

    Additionally, by allowing participants to conduct all transactions-
    including making changes to contribution percentages-through the Web site
    or telephone services, plan managers also rely less on employers to
    provide services. One plan manager we spoke with described the use of
    on-site representatives as flawed, because information provided by
    different on-site representatives may vary. By providing all information
    through a Web site or centralized contact center, the manager told us, the
    plan could ensure consistency of service. Despite this, some plan managers
    we spoke with did use on-site representatives in a limited capacity. One
    plan manager provided limited on-site support for its state government and
    school district clients, but the arrangement was specific to the plan
    sponsor and the plan manager did not have a companywide practice for
    utilizing such representatives. Specifically, the number,

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

    location, and function of representatives provided to a client varied from
    plan sponsor to plan sponsor. For its state government and school district
    clients, the plan manager only provided on-site service when the plan
    sponsor specifically requested a representative or during specified times,
    such as open enrollment periods.

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

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

    Private sector plan managers regularly gather participant feedback and use
    the feedback received to improve their customer service. Since most
    private plan managers deliver customer service through multiple methods,
    they use a number of mechanisms to gather participant feedback. These
    mechanisms are customized to gather information specific to the service
    method the participant used. For example, some plan managers we spoke with
    provide a link on their Web site to a survey that allows participants to
    share their impressions of and experiences with the service provided
    through the site. Some managers also use short on-the-spot surveys to
    gather feedback about a participant's experience on the plan manager's Web
    site.25

    These plan managers also survey participants after they have interacted
    with the plan's contact center and voice response telephone system through
    short, automated surveys at the end of a call. Managing officials told us
    that these surveys include questions regarding the service method's

    25Unlike pop-up advertisements that may be unwelcome to Internet users,
    the surveys provide participants the opportunity to give feedback through
    a convenient method according to plan managers, especially if participants
    were having difficulty with the Web site or if they had suggestions for
    improving the functionality of the site. The on-the-spot surveys that we
    observed appeared to be short and easy to fill out.

    ease of use, whether or not the participant was able to complete the
    intended transaction, and sometimes ask whether the participant has
    suggestions as to how the service method or transaction process could be
    improved. Traditional survey methods are also used, such as an annual mail
    or telephone survey to randomly sample participants and assess their
    overall level of satisfaction with the services provided. However, plan
    managers said that these surveys take longer and are more costly to
    administer than other methods.

    All of the plan managers we spoke with emphasized the importance of
    incorporating participant feedback into their customer service delivery
    models in order to better meet the needs of their participants. They told
    us that it is important to determine what is working and what is not by
    regularly gathering participant feedback. For example, one plan manager
    told us that his plan had been mailing participant statements to the
    employer for distribution for several years. He thought that this method
    of distribution would be more convenient and cost-effective for the plan
    and that since no participants were complaining, it must be working
    efficiently. However, when participants were surveyed, they made it known
    that the statements were usually not distributed by their employer in a
    timely manner, if at all, and as a result, statements are now mailed
    directly to participants. Another plan manager said that his plan had
    redesigned its entire Web site and added features based primarily on
    feedback from their participants.

    TSP managers said that they have not surveyed participants since the early
    1990s because they were waiting for a new record-keeping system to be
    developed, and they said it would not have made sense to survey
    participants until after the transition issues were resolved and
    participants had some experience under the new system. Rather than survey
    participants shortly after the new system was implemented, in 2003, TSP
    managers have since decided to wait until a new investment option is added
    to the existing selection of five funds. The Board anticipates
    implementing the new option in mid-2005. Although the Board has a system
    for addressing participant complaints, TSP has no systematic mechanism in
    place for soliciting participant views about the quality of the service
    they are receiving. Instead, TSP managers rely largely on indirect
    feedback from NFC and TSP staff and others, such as agency coordinators,
    who respond to complaints or requests for assistance from participants.
    Agency coordinators and the call center representatives at NFC provide
    some feedback to TSP managers regarding areas of potential improvement.
    TSP managers are also responsible for gathering participant feedback
    through the Employee Thrift Advisory Council, as required by

    FERSA. However, while some ETAC representatives provide TSP managers with
    feedback on draft TSP publications, legislative initiatives, and other
    issues, ETAC representatives do not systemically solicit feedback from
    their constituents. Some ETAC representatives may receive sporadic
    feedback from participants, but ETAC does not conduct surveys of plan
    participants. As a result, TSP managers are dependent on call center
    representatives or agency coordinators to forward any feedback they
    receive from participants. Also, the executive director of ETAC said that
    TSP participants might be more likely to raise customer service issues
    with their local representatives, such as union representatives, rather
    than elevate issues to the national level. Therefore, the extent to which
    participants within the represented agencies and employee organizations
    provide feedback to their ETAC representative is unclear.

    Because TSP relies on customer complaints as an indicator of participant
    satisfaction, its managers do not have the information necessary to
    determine the degree to which participants are satisfied with the
    services. A TSP official said that because participant complaints have
    decreased significantly and leveled off since the record-keeping system
    conversion in June 2003, participants are probably satisfied with the
    services that TSP is providing. However, TSP managers' reliance on
    complaints does not take into account participants who are dissatisfied
    and have not complained or do not know where to complain about the
    services they received. In other instances, participants have to send
    letters to TSP managers or the TSP call center, or contact their member of
    Congress with problems or concerns they have had with the services they
    received.

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

    Private sector plan managers that we spoke with also utilize more
    up-todate technologies to improve customer service than TSP does. We found
    that the privately managed plans' Web sites provided participants more
    flexibility and options for managing and learning about their retirement
    accounts than did the TSP Web site. Private plan managers also told us
    that one part of providing the best possible customer service is allowing
    participants to serve themselves in an easy and convenient manner, and
    they have found that the more up-to-date technology that they have
    incorporated into their customer service delivery models helps facilitate
    participant self-service. For example, one plan manager's Web site allowed
    participants to instantly create and print account statements for any
    period of time. This allows participants to easily determine how much they
    earned, lost, or contributed for any given period of time. Plan managers
    said that such information helps participants make decisions about how to
    allocate their funds and about retirement planning. Conversely, the TSP

    Web site only makes statements available for calendar year quarters, and
    the participant must wait approximately 2 weeks after the close of the
    quarter to obtain the statement.

    Privately managed plans also use their Web sites to help participants
    understand their retirement plan and the options available to them within
    the plan. For example, one plan manager we spoke with provided access to
    prerecorded seminars on the Web sites that cover current accountrelated
    topics and features. Participants may view these seminars at any time as
    an alternative to the printed literature that was also available through
    the Web site if desired. Conversely, the TSP Web site only offers print
    copies of its general plan information brochure, available in hard copy or
    for viewing online, and the brochure on general plan information has not
    been updated since mid-2001.

    The private plan managers that we spoke with also utilized more
    sophisticated calculators on their Web sites than does TSP. For example,
    one plan manager's Web site provided a calculator that would project a
    participant's account balance given certain hypothetical parameters, such
    as number of years before retirement, that the participant can select. The
    calculator is securely linked to the participant's account, and certain
    items, such as the participant's account balance and historical rate of
    return on assets, are automatically entered into the calculator,
    simplifying the process for the participant. TSP also offers an account
    projection calculator, but the calculators they offer are not on a secure
    server and all parameters must be specified manually, and the participant
    may not know what assumptions, like the estimated rate of return, are
    reasonable to specify. The plan managers that we spoke with told us that
    participants are more likely to use and benefit from tools such as the
    retirement income projector if they are convenient and easy to use.

    All of the private plan managers that we spoke with emphasized the
    importance of keeping abreast of the latest technology and industry trends
    in order to provide participants with the highest possible level of
    customer service. For example, two plan managers told us that they
    regularly and systematically review not only their competitors' Web sites
    for new ideas and innovations, but they also study the Web sites of other
    companies, such as Yahoo and Amazon, to keep abreast of the latest
    technological developments. Because TSP managers are not taking full
    advantage of such technology, TSP participants may not receive the
    benefits it offers. As plan managers have continually updated their Web
    sites to incorporate more sophisticated features, they have simultaneously
    experienced increased Web usage and decreased calls to service
    representatives by

    Conclusions

    participants. Another manager stated that certain Web features could
    reduce mailing costs by allowing plan managers to provide some information
    electronically.

    Although TSP managers have a simple and functional Web site available for
    participant use, the site does not offer the flexibility and convenience
    of the Web sites provided by the private plan managers that we reviewed.
    Although TSP managers told us that they have recently taken steps to learn
    about industry innovations-including talking to and occasionally visiting
    private sector plan managers, viewing private sector Web sites, and
    reviewing the literature from researchers in the field, they have not yet
    institutionalized the routine collection of information to regularly and
    systematically assess trends and innovations in the defined contribution
    industry. 26

    TSP has become one of the largest retirement savings plans in the United
    States, and it must provide customer support and record keeping for
    millions of participants across many federal agencies throughout the
    United States and, in some instances, the world. TSP must exchange
    information with multiple federal agency payroll, personnel, and
    dataprocessing representatives and handle millions of participant
    transactions every month. In addition, TSP relies on other federal
    agencies to provide participants' benefit information, including
    educational and other information, on TSP. Because these characteristics
    make TSP unique, its approach to customer service is naturally somewhat
    different from that of other pension plans. Nonetheless, some aspects of
    private sector practices seem appropriate for TSP managers to consider.
    For example, as TSP managers continue to modernize their customer service
    operations, they should look for opportunities to use participant feedback
    to identify broader innovations to improve their services, in addition to
    focusing on individual participants' specific concerns. The practices of
    private sector plan managers suggest that direct, ongoing participant
    feedback is invaluable in responding to the changing needs of plan
    participants. Without obtaining more frequent and representative feedback
    from participants, TSP managers cannot determine what improvements would
    best satisfy participants' needs.

    26At the September 20, 2004, TSP Board meeting, the Executive Director
    announced his intention to visit the operations of a few select private
    sector plan managers.

    While recognizing the recent improvements made to TSP's customer
    service-such as the new record-keeping system, the additional call center,
    and toll-free telephone service-we conclude that TSP could benefit from
    additional measures that could enhance customer service further. For
    example, the innovative, technological, and operational practices that
    have become commonplace in the private sector customer service industry
    might be means to continual customer service improvements at TSP. Also,
    TSP could benefit from regular and sustained examination of private sector
    customer service practices. As TSP participants become more familiar with
    online financial transactions and the services provided by private plan
    managers, participants may come to expect services not currently provided
    by TSP. However, the costs of making changes to TSP's services would have
    to be balanced against the potential benefits such changes could provide
    to participants and the plans themselves.

    To help ensure that federal workers have the options needed to effectively
    plan and to encourage them to save for retirement, TSP managers should
    continually seek new ways to improve their customer service operations.
    Both the potential costs and benefits should be weighed in making
    decisions about changes to service. Therefore, we recommend that the
    Federal Retirement Thrift Investment Board direct the Executive Director
    to take the following actions:

      Recommendations for Executive Action

    o  Develop and implement an evaluation effort to systematically assess the
    level of customer satisfaction and to identify, as needed, areas of
    potential improvement for the ThriftLine, caller assistance center,
    Web-based transaction system, and TSP coordinator program. It should
    consider a variety of different approaches, including traditional methods
    such as surveying participants annually through the mail or telephone to
    assess their overall level of satisfaction with the services provided,
    supplemented by other approaches, such as exploring the use of Web-based
    and automated telephone call evaluation tools to randomly survey TSP
    participants.

    o  Institutionalize the routine collection of information from the largest
    private sector plan managers to keep up with current industry trends and
    assess whether the new and existing practices used by private managers
    would prove advantageous and cost-effective to TSP.

      Agency Comments 	and Our Evaluation

    We obtained written comments on a draft of this report from the Federal
    Retirement Thrift Investment Board and made changes to the report as
    appropriate. The full text of these comments is reproduced in appendix II.
    In response to the Board's comments, we added information regarding its
    plans for surveying participants. We also added information regarding the
    Board's recent announcements that it will review the service provided by
    private plan managers. The Department of Labor was also provided a draft
    of this report for review and advised us that it had no comments.

    In its written comments, the Board disagreed with our recommendation
    regarding the implementation of an evaluation effort to assess the level
    of customer satisfaction. The Board stated that our recommendation was
    moot because the Board had previously announced its intention to survey
    TSP participants on a variety of topics, including client satisfaction.
    However, in its February 2004 monthly meeting, the Board said that such a
    survey would not be conducted for at least another 2 years. As we state in
    our report, the private sector plan managers that we spoke with believe
    that direct, ongoing participant feedback is needed to respond to the
    changing needs of plan participants. Without obtaining more frequent
    feedback from participants, TSP managers cannot determine what
    improvements would best satisfy participants' needs. The Board also
    suggested that certain aspects of plan performance indicate increased
    participant satisfaction. In particular, the board stated that TSP's high
    participation rate, increased number of transactions, and low account
    withdrawal rate among inactive participants, such as retirees or former
    employees, imply a high level of participant satisfaction. Although such
    performance measures provide an indication of participant satisfaction,
    more sophisticated efforts, such as participant surveys, are needed to
    provide direct information on the changing needs of plan participants and
    what improvements would best satisfy those needs. We recognize that these
    efforts may require substantial resources, which is why other means, such
    as exploring the use of Web-based and automated telephone call evaluation
    tools to randomly survey TSP participants, are needed as supplementary
    efforts. Without a systematic effort to obtain feedback from participants,
    the Board is not in the best position to determine participant
    satisfaction.

    The Board also disagreed with our recommendation that it should routinely
    solicit information from the largest private plan managers to assess
    whether their practices would be advantageous and cost-effective if
    adopted by TSP. The Board said that it has conducted and will continue to
    conduct on-site reviews of the largest private plan managers to determine
    the services they provide and the technological capabilities they plan for

    the future. While the Board's recent visits to such plan managers are a
    positive step, we believe that a routine and systematic effort to survey
    practices used in the private sector customer service industry should be
    institutionalized as a regular aspect of TSP's operations. Further, in
    considering which new practices to adopt, the Board would need to weigh
    the costs of making changes to TSP's services against the potential
    benefits to participants and the plans themselves. Conducting such cost/
    benefit analyses is a management function and would be inappropriate for
    GAO to initiate.

    The Board suggested that the section of our report on customer service
    options questions the federal government's reliance on agency retirement
    counselors for the delivery of TSP information and service. This section
    of the report was descriptive, illustrating the different ways in which
    private sector entities and TSP managers provide customer service. While
    we noted that some federal agencies use on-site coordinators, we observed
    that, in general, the private sector tended to rely less on coordinators
    and more on call center representatives, automated telephone services, and
    Web sites to deliver informational and transactional resources to the
    participants. The Board stated that it rejects the suggestion that the
    focus of retirement education be shifted away from retirement counselors.
    We are not suggesting that the agencies move away from retirement
    counselors, but we emphasize that providing retirement information through
    the use of retirement counselors does not preempt TSP managers from also
    providing such information through call centers and Web sites.

    The Board questioned the feasibility and value of implementing several
    customer service features used as examples in the draft report. For
    example, we included a discussion about a private sector Web site that
    could display a graph of the projected growth rate of a participant's
    account at the current contribution rate as well as at a slightly higher
    hypothetical rate to demonstrate the effect of higher contributions. This
    example was used only to illustrate the type of educational features used
    by the private sector and was not necessarily intended as a specific
    recommendation to be implemented. However, we maintain that the private
    sector offers a range of Web features, particularly those concerning
    education and retirement information, that are not available to TSP
    participants. Similarly, other examples, including on-the-spot participant
    surveys and more flexible options for statement preparation, were intended
    to illustrate the types of advanced tools private sector plan managers
    provide to their participants rather than as specific recommendations to
    be implemented.

    The Board also stated that the draft ignored TSP's superior performance
    results as measured by key standards that demonstrate that TSP
    significantly outperforms the private sector. In response, we noted that
    TSP had generally met its standard for call center performance
    measurement, such as the percentage of all calls answered within 20
    seconds, except for a period of about 10 months of increased caller volume
    as the Board implemented its new record-keeping system. However, as
    presented in the draft, private managers told us that they downplayed the
    importance of quantitative measures and instead focused on ensuring that
    service representatives fully satisfied each customer's needs efficiently
    and politely in one call. Specifically, private sector managers emphasized
    this policy of first-call resolution as an overriding goal and viewed the
    quantitative measures, such as those emphasized by TSP, as secondary or,
    in some cases, an inaccurate measure of call center performance.

    Finally, the Board stated that the draft failed to address three of the
    five areas of interest to the committee. At the conclusion of the design
    phase of our study, GAO and the committee staff agreed to the objectives
    stated at the beginning of this report. We eliminated the other areas of
    interest largely because they overlapped with the scope of an ongoing
    audit by the Department of Labor of TSP's customer service.

    As agreed with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days
    after its issue date. At that time, we will send copies of this report to
    the Secretary of Labor, the Federal Retirement Thrift Investment Board,
    appropriate congressional committees, and other interested parties. In
    addition, we will make copies of this report available at no charge on
    GAO's Web site at http://www.gao.gov/.

    If you have any questions concerning this report, please contact me at
    (202) 512-7215 or Tamara Cross at (202) 512-4890. Other major contributors
    include Daniel Alspaugh, Amy Buck, Richard Burkard, Erin Daugherty,
    Malcolm Drewery, Michael Morris, Corinna Nicolaou, and Roger Thomas.

    Sincerely yours,

    Barbara D. Bovbjerg Director, Education, Workforce, and Income Security
    Issues

                          Appendix I: Scope and Methodology

    To describe how Thrift Savings Plan (TSP) managers provide customer
    service, we interviewed TSP managers at the Federal Retirement Thrift
    Investment Board headquarters in Washington, D.C., and officials at the
    Department of Agriculture's National Finance Center (NFC), which has been
    the major contractor for account maintenance and participant support since
    TSP began operations in 1987. In addition, we reviewed documentation
    governing TSP's customer service operations, attended monthly Board
    meetings, and interviewed officials at the Department of Labor and the
    Employee Thrift Advisory Council (ETAC). Specifically, to describe the
    customer service operations of the ThriftLine and call center, we also
    observed center operations at the NFC in New Orleans, Louisiana, including
    customer service representatives taking telephone calls from TSP
    participants; we also collected and reviewed information on the number of
    calls made to the ThriftLine, the percentage of calls answered within
    specified time frames, and the number and duration of calls referred to a
    customer service representative. To describe the customer service
    operation of the TSP Web site, we also observed and documented the
    information and features available on the Web site through our personal
    computers at GAO and obtained information from TSP managers on the number
    of visits made and transactions conducted over the TSP Web site. We also
    interviewed TSP managers and NFC officials regarding the reliability of
    their call center or Web site data, such as the number of calls received
    or the number of interfund transfers transacted through the Web site.
    However, they were unable to provide information about any reliability
    tests that might have been performed. Call center and Web site data are
    presented here for illustrative purposes. Because these data are not
    central to the findings, conclusions, or recommendations of this report we
    did not assess their reliability. To describe the role of the agency
    coordinator, we also interviewed nine TSP coordinators, selected on the
    basis of a nonrandom sample of federal agencies with 5,000 or more
    employees (U.S. Postal Service, Department of Defense, Social Security
    Administration, and General Services Administration) and federal agencies
    with fewer than 5,000 employees (Government Accountability Office, Federal
    Trade Commission, Office of Personnel Management, Small Business
    Administration, and the Railroad Retirement Board). We also reviewed the
    Federal Employees' Retirement System Act and Department of Labor guidance
    on responsibilities of the federal agencies participating in TSP.

    To describe how private sector plan managers provide customer service
    through call center representatives, automated telephone systems, Web
    sites, and on-site representatives, we visited managers of other large
    defined contribution plans, conducted interviews, observed their customer

    Appendix I: Scope and Methodology

    service operations, and in some cases obtained documentation on their
    operations. Specifically regarding private call center representatives and
    automated telephone systems, we obtained information regarding their
    customer service philosophies, use of call center benchmarks, call center
    staff training and evaluation policies, call center technology, and call
    volume management. In some cases, we obtained call center representative
    training manuals and call center statistics. We also listened to live
    calls with call center representatives and observed the software tools
    used by these representatives to assist callers at some of the plan
    managers that we visited. We also observed their Web site pages and
    features, such as their retirement calculators and education materials and
    discussed how often they update their Web sites and how they determine
    what to include on their sites with management and information technology
    specialists.

    To identify customer service practices used by private sector plan
    managers that TSP managers could consider to improve its services, we also
    obtained copies of both online and printed customer service-related survey
    instruments and, in some cases, survey results, and discussed with plan
    managers how they used this information to determine what changes would be
    made to their customer service delivery.

    To select managers of similar defined contribution plans for comparison,
    we selected 4 of the top 10 private sector plan managers and 1 of the top
    3 state and local government agency plans based on total plan assets under
    management as of December 31, 2002, as reported by Pensions & Investments
    and Plan Sponsor Magazine. The five plan managers that we spoke with had
    an average of $169.8 billion under management and serviced an average of
    4.8 million participants. They ranged in size from $9.8 billion to $282.0
    billion under management and from 150,000 to 10.3 million participants. We
    also spoke with private and public pension industry groups such as the
    Profit Sharing Council of America and the National Association of
    Government Defined Contribution Administrators about our selection
    methods.

    Appendix II: Comments from the Federal Retirement Thrift Investment Board

    Appendix II: Comments from the Federal Retirement Thrift Investment Board

    Appendix II: Comments from the Federal Retirement Thrift Investment Board

    Appendix II: Comments from the Federal Retirement Thrift Investment Board

    Appendix II: Comments from the Federal Retirement Thrift Investment Board

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