The Federal Retirement Thrift Investment Board (FRTIB), which runs the approximately $1bn defined contribution (DC) Thrift Savings Plan (TSP), is suing American Management Systems (AMS) for $350m, claiming breach of contract and fraud on AMS' part.
At the centre of the legal dispute is what the FRTIB calls the consistent failure of AMS to develop and implement a new record-keeping system for the TSP. AMS was awarded the contract to develop and implement the new TSP record keeping system in 1997, and the FRTIB has called in its lawyers after repeated delays to the system's completion.
According to the FRTIB, AMS has missed four previous deadlines and when asked for a firm confirmation of the January 2002 delivery date, AMS refused to do so. The FRTIB claims that this confirms its suspicions that AMS knew it could not make that date, but would not admit it to the Board.
The FRTIB's lawsuit, filed in the United States District Court for the District of Columbia, seeks $50m in compensation and $300m in punitive damages. Another bone of contention is the escalating cost of the project. When the contract was awarded to AMS in 1997, the FRTIB was quoted a price of $30m, which has tripled since then.
As a contingency against the failure of AMS to complete the system on time, the FRTIB last September hired Materials, Communication & Computers (MATCOM) to upgrade its existing systems. MATCOM's contract with the FRTIB states that the upgrade must be completed within one year and that the total cost must not exceed $20m.
The TSP is a retirement savings plan for US federal employees, similar to a 401(k) plan. It was created by the 1986 Federal Employees' Retirement System Act. The TSP serves approximately 2.5m federal employees and is the largest defined contribution plan in the world.
By Geoffrey Ho
A "substantial" parliamentary bill acting as a "roadmap" for the long-term future of private pensions will lead to a "significant period of calm", Guy Opperman has promised.
The Department for Work and Pensions (DWP) has completed its appointment process for the Single Financial Guidance Body's (SFGB) board, naming three non-executive directors.
Pensions and financial inclusion minister Guy Opperman has launched a simplified two-page annual statement in a bid to provide a best practice template for the industry.
Some 70% of defined contribution (DC) members want to know their scheme is personalised and tailored to their needs, an Invesco language study reveals.