TIAA-CREF (Teachers Insurance and Annuity Association–College Retirement Equities Fund), one of the nations largest private retirement systems, has had ongoing issues with internal systems that have caused delayed access to pensioner funds.
While the company has pointed to infrastructure upgrades as the culprit, internal TIAA-CREF e-mails obtained by eWEEK from an anonymous source indicate that the pensioner issues are directly related to a major implementation of the companys Open Plan Solutions platform.
According to the e-mails, from Oct 1 through Dec 1, 5,529 participants—schools and universities—that migrated to the new platform experienced payment delays.
That includes lump-sum annuity disbursements, systematic payments, transfer payout annuities, interest payment retirement options and individual retirement accounts.
TIAA-CREF consultants were authorized to pay bank charges for participant overdrafts.
In November, problems were also identified with TIAA-CREFs Single Sum Settlement System that created issues primarily with systematic withdrawals, but with other lines of business as well.
Herb Allison, TIAA-CREFs CEO, gave a nod to the system failures in a Dec 2005 letter to customers posted on the companys Web site. With reference to infrastructure upgrades, Allison said, "overall, we are progressing well, but in occasional instances we have inadvertently inconvenienced customers. In November we introduced new functions that delayed payments to some participants and caused us to be late in getting forms to others."
While TIAA-CREF has said only a small percentage of users were affected by the migration snafus, pensioners and former employees have put the number closer to 15,000.
Allison said in his letter the company is continuing to address the causes of the problems.
Pensioners who still do not have access to funds want to know whats being done to solve the issues—not internally, since theyre getting few concrete answers from TIAA-CREF—but externally from regulatory authorities.
"I dont understand how they can do this," said one pensioner, whos been waiting for rollover funds since late October, in an e-mail to eWEEK sent Dec. 31.
"Why arent they sending me e-mails and updates? Why isnt there any information about the situation on their Web site? Cant they be penalized for failing to perform?"
TIAA-CREF operates as both an insurance and mutual fund company and as such is under the regulatory authority of the Securities and Exchange Commission and the New York State Insurance Department (TIAA-CREF is incorporated in New York).
TIAA-CREF informed the New York State Insurance Department in December that there were some issues. But given the lack of consumer complaints and an understanding that the issues are not widespread, the Department hasnt gone any further with investigations, according to Wayne Cotter, research director at the Insurance Department.
"We would expect any of our licensees to contact us regarding issues and they did," said Cotter, in Manhattan. "From our point of view we saw [the pensioner issues] as an internal problem and didnt see it affecting a large number of consumers."
Should the Insurance Department determine there is some substantial consumer frustration—with any organization—it would then launch a Market Conduct Examination to determine if theres proper conduct, according to Cotter.
"We may look at whether consumers are being given the proper information, the proper payments if its an annuity. We can do those on a regular basis, or a targeted basis," said Cotter.
"But were not talking about this [with TIAA-CREF]. That would be a last resort."