After ‘failed’ Converge rollout, TSP participants file class-action lawsuit

Federal employees are seeking damages from the agency in charge of the Thrift Savings Plan, claiming the major update last summer from the Federal Retirement Thrift Investment Board and Accenture Federal Services resulted in significant harm to TSP participants.

Seven TSP participants, who filed a class-action lawsuit Thursday, alleged that FRTIB and AFS, along with AFS’ contracting partner Alight Solutions, failed to give participants the services that the contract, industry standards and federal law required. The legal action, coming exactly one year after the 2022 update, follows a long series of participants’ complaints, concerns and frustrations with the new system.

TSP has over 6.5 million members and more than $838 billion in assets. Though the exact size of the class is unknown, the plaintiffs said they “believe that the class consists of hundreds, if not thousands, of persons and entities that were harmed by defendants’ conduct.”

Officials from AFS and FRTIB, whom Federal News Network got in contact with, both declined to comment on the pending litigation.

Severe technical problems in the weeks and months following the launch of the “Converge” update led to longer times for processing loans, withdrawals, death benefits and more, the plaintiffs alleged. The participants said AFS and Alight’s lack of preparations led to the issues with the services TSP is required to provide to federal employees and retirees.

The processing challenges, which went on for weeks, and in some cases months, caused participants to struggle to get time-sensitive loans and withdrawals processed. Because of the delays, some TSP participants went with private loan providers instead, taking on much higher interest rates.

The participants said the delays in processing loans, withdrawals and death benefits also differed from the promised timelines detailed on TSP’s website. For example, despite TSP’s website stating that loans are typically processed within three days, many participants experienced much longer processing times after the update.

“Since AFS and Alight became the TSP recordkeepers in 2022, TSP participants who have applied for and were approved for TSP loans have not received their funds within three days, or even three months in some cases,” the plaintiffs alleged. “Indeed, TSP participants have reported that funds were deducted from their accounts, but they never received the proceeds.”

Similar processing delays occurred for those seeking withdrawals, including hardship withdrawals, as well as death benefits. Soon after the rollout last summer, many TSP participants said they were also unable to name a beneficiary in the new system.

As a result of the delays in TSP services, the plaintiffs alleged that many participants suffered damages, and are now seeking relief from FRTIB and the two federal contractors.

“What makes these problems all the more wrong is that they were foreseeable, avoidable and of the defendants’ own doing,” the participants said in the class-action lawsuit. “Military personnel, veterans and federal employees are stuck waiting for money they timely and properly requested, and that TSP promised to them, while bills and other expenses continue to pile up.”

What happened with the Converge update?

After 18 months of preparation, the recordkeeper transition modernized TSP’s IT infrastructure, call center system and cybersecurity protocols, as well as made front-facing changes, including a brand new My Account website, a mobile app, a mutual fund window and an online chatbot.

But the update was riddled with technical difficulties, ultimately leading to a skyrocketing number of calls to customer service. After the launch, many participants were left on hold for hours at a time, often with no answers or solutions.

FRTIB awarded the recordkeeping contract to AFS in 2020, which charged the contractor with maintaining eligibility records, managing payroll data, processing transactions, issuing account statements, providing online account access and providing customer support.

After the tumultuous launch, AFS apologized for the rollout of Converge, promising to correct errors and continue to make improvements as needed. AFS said it has taken action to resolve the problems, and promised more improvements are on the way.

Participants, on the other hand, have made other efforts to push back against the TSP system overhaul, including by reaching out to their representatives. Del. Eleanor Holmes Norton, along with Rep. Abigail Spanberger (D-Va.), repeatedly called on FRTIB to fix the issues, which eventually led to the Government Accountability Office agreeing to audit and publish an upcoming report on the rollout. GAO officials have said their work is now underway, and the agency will complete their audit of TSP by early 2024.

Sauder Schelkopf, one of the law firms that helped file the lawsuit on behalf of TSP participants, said many individuals were negatively impacted by the TSP update.

“Our clients, all of whom are current or former military members or federal employees, suffered significant financial hardship because of the Thrift Savings Plan system implementation in June 2022. In many instances, they were simply trying to withdraw their own money from the TSP,” said Joseph Sauder, a plaintiff attorney at Sauder Schelkopf, in a press release.

The law firm is asking TSP participants who have “experienced excessive wait times for TSP to move your investments and suffered a loss,” to contact Sauder Schelkopf attorneys.

The plaintiffs are demanding a jury trial, and calling for an award of appropriate damages, as well as a declaration that FRTIB, AFS and Alight are financially responsible for participants’ losses.

“AFS and Alight completely failed to deliver a fully operational system on June 1, 2022, or for months thereafter,” the plaintiffs alleged. “As a result of defendants’ seriously deficient and inoperable TSP management system and operations, plaintiffs and TSP participants have been damaged.”

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