The suit seeks “an award of appropriate damages, including punitive damages” against the TSP and its contractor. Image: Mark Van Scyoc/Shutterstock.com
By: FEDweek StaffA class action suit has been filed against the TSP related to problems that arose starting last June after a changeover to a new operating system.
Since that transition last June 1, “plan participants have alleged that the new TSP system created a slew of issues for TSP participants (e.g., denied access to accounts, denied access to historical information, denied ability to control assets, and unbearable wait times for assistance),” said the law firm that filed the suit.
“In addition to issues accessing their TSP accounts, the lawsuit alleges that the system failed to provide TSP participants the benefits and services required by the contract, industry standards, and federal law by failing to (1) disburse loan proceeds to approved participants, (2) send hardship withdrawal monies to eligible participants, (3) send out-of-services withdrawal monies to approved participants, and (4) process death benefits to beneficiary participants,” it said.
The suit includes complaints by individual account holders including: a delay in taking a financial hardship withdrawal that caused the person to have to take out an interest-charging loan; a six-month wait to take a post-separation withdrawal; a request for death benefits that went unpaid until a member of Congress intervened on the individual’s behalf; and a delay in receiving the proceeds from a loan that lasted so long that the recipient was warned that he was potentially in default of not making the required payments.
In those cases and in others, the suit recounts that the individuals contacted the TSP numerous times for help—in one, “approximately ninety-five times”—and that the problems resulted in financial hardships. The suit seeks “an award of appropriate damages, including punitive damages” against the TSP and its contractor – naming Accenture Federal Services, Alight Solutions LLC and the FRTIB as defendants.
While such complaints have decreased since last summer, some have continued. The most recent major issue involved the TSP’s failure to send required distributions on time to some 2,000 retirees before the end of 2022. Such issues have drawn the attention of Congress, including an ongoing review by the GAO and proposals to create an internal inspector general’s office for the TSP.
The TSP said it cannot comment on pending litigation.
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