TSP to assess capacity to handle stock market plunges

Officials overseeing the Thrift Savings Plan should be sure they are prepared to handle an increased volume of transactions in the event of a major market plunge, members of the retirement plan's board said at a meeting Monday.

TSP officials noted that following the stock market drop in late February, about 10 percent of participants with investments in the 401(k)-style plan's International (I) Fund made changes. Though the market recovered quickly, board Chairman Andrew Saul said the plan must be prepared to deal with a major influx of transactions.

"We have to make sure we are building ourselves up structurally for increased volume and increased participants," Saul said. "God forbid that we have a major world event…we really have to plan for this."

Officials noted that the system that processes the transactions normally operates on about three-fifths of its capacity. Should the market fall significantly, the system could be turned on to full capacity, allowing it to handle approximately four to five times the volume of transactions. Any transactions that exceeded that amount could be delayed.

Saul recommended that TSP officials assess the situation and issue a report, and that the issue be discussed in-depth at next month's board meeting.

Meanwhile, new TSP Executive Director Greg Long said plan assets are now up to $213 billion and are increasing by $10 billion per quarter. TSP also has more than 3.7 million participants, Long said.

"We said we'd be a $400 billion plan in three years, but I think we're going to be a $400 billion plan in two years," Saul said. "You really have a fund that could grow at least $50 billion a year."

During the past month, military service members' participation in the plan increased from 24.3 percent to 24.6 percent, Long said. He added that TSP officials will receive data from the Defense Department next month on military service participation during the past year.