-CREF Effectively Stealing, Customer Claims”>
TIAA-CREF, despite the attempts to inspire an altruistic image and the perception its IT woes are in the past, has proven to be a source of frustration to customers, leading some to file complaints with the Securities and Exchange Commission and at least one to accuse the financial services giant of theft.
Despite efforts to recover from an IT infrastructure failure in 2005 and 2006 that affected thousands of TIAA-CREF participants who were unable to access funds in a variety of accounts, customers continue to report difficulty accessing funds, calculating contributions or even accounting for their own money.
In statements to eWEEK and comments on Internet message groups, customers report accounting errors that fail to acknowledge contributions and, worse, deduct from customers accounts.
“At this point, TIAA-CREF has just effectively stolen the December contribution from all the schools employees,” said Brian Hoyt, a network administrator at Roland Park Country School, in an e-mail to eWEEK.
The majority of his schools employees are being affected by the schools December 2006 conversion to the TIAA-CREFs new automated platform.
“Everything seemed fine until mid-March,” he wrote. “At that point the majority of employees received a letter indicating either duplicate or incorrect contributions and as a result a deduction was made—a deduction of the 12/15/06 contribution. Looking at TIAA-CREFs own statements there is no indication of anything other than a normal contribution. The money was simply removed and never returned.”
Hoyt said that he has worked with his schools TIAA-CREF administrator to resolve the issues and found that employee contributions were properly withdrawn from the schools accounts, but not returned when errors were pointed out. “This has been verified by external auditors,” said Hoyt, who then initiated a call to TIAA-CREF in April, but by July had not seen any resolution.
Hoyt is considering contacting the SEC “in hopes of getting some response.”
The irony is that complaints and threats of legal action come as TIAA-CREF takes steps to repositions itself as the not-for-profit benefactor of the people and efficient protector of customers financial futures.
In its “Powerof.org” marketing campaign launching this week, TIAA-CREF is endeavoring to send a message: with an .org designation—the equivalent of a non-profit status—to its Web site versus a .com, or commercial, address, the company is all about serving those who serve the greater good.
“Ever heard of a dot.org crash?” asks an Aug. 15 print ad in The New York Times. “As a dot.org we dont play to the whims of the market. Instead, we think long term and are committed to consistent performance.”
Read more here about TIAA-CREF problems of the past.
The campaign is also designed to foster an atmosphere of trust as TIAA-CREF executives try to put behind them a “panoply of problems that included difficulties with a new information technology system, which prevented customers from gaining access to accounts; [and] the loss of several big contracts to manage pension and insurance plans for university employees in states like California and New York,” according to an Aug. 15 article in The New York Times detailing the Powerof.org marketing concept.
“TIAA-CREF still has big problems with its higher education accounts,” wrote Walter Maner, a computer science professor at Bowling Green State University in Ohio, in a July e-mail to eWEEK. “Starting in June of last year, TIAA-CREF appears to have been subtracting my Tax Deferred Annuity contributions instead of adding them. Their multiple mistakes appear to total into the $34,000-$50,000 range. Cant be sure because, amazingly, there is no one at TIAA-CREF that can answer the following simple question: According to TIAA-CREF records, how much did I contribute to my TDA during the calendar year 2006?”
For the calendar year 2006, Maner found nearly a dozen major mistakes. In an effort to make some kind of correction after learning about his issues, TIAA-CREF subtracted Maners contributions and didnt add them back in. “So instead of having a $100 contribution, it was subtracted. So the net difference was $200,” explained Maner. “So that made a nearly $40,000 error for 2006, by the time they compounded the subtraction with no credit back. The big problem from the end user stand point is you just cant find out what they think they know; I know what went in from my end.”
Maner said that TIAA-CREF representatives were unable to answer his balance inquiries because they were only able to see data back to June of 2006. While most of the issues for 2006 were eventually solved as a result of his continuous diligence, Maner said that he is finding new problems with his 2007 statements.
About 130 additional employees at BGSU have also been affected by the processing issues at TIAA-CREF, a situation that has forced the school to pull back on its planned conversion to TIAA-CREFs newer automated platform, according to Maner.
“Our institution is not recommending TIAA-CREF anymore and is refusing to convert to the new automated system until they get the system corrected. [TIAA-CREF] appears to be willing, but it appears to be an issue with backend processing,” said Maner in an Aug. 14 interview with eWEEK. “Its very complicated for [TIAA-CREF]. If they make a mistake in December 06, as they did for me, they have to run backend processing to correct for December, and have to do it every month right up to current date; they have to run separate times for each propagation.”
Current Issues Remain a Mystery
eWEEK reported in January of 2006 that customer woes at TIAA-CREF, initially said by the company to be the result of infrastructure upgrades, were in fact the result of a massive system implementation of SunGards Open Plan Solutions platform that affected thousands of TIAA-CREF participants who were unable to access funds in a variety of accounts, including lump sum annuity disbursements, systematic payments, transfer payout annuities, interest payment retirement options and individual retirement accounts.
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The system upgrades began in 2005 at TIAA-CREF when the companys then-new CEO, Herb Allison, determined it was time to modernize the companys IT infrastructure and provide new services to the companys customers. The Open Plan Solutions platform was designed to integrate the companys legacy annuity, mutual fund and other service offerings into a single system. At the same time TIAA-CREF also consolidated its data network, implemented a single data security firewall, put in a new trading and settlement system, new desktop systems for customer service agents and upgraded its financial systems.
Its not clear where the current issues with customers stem from, but the problems are being blamed on the “system upgrade” according to customers who have contacted TIAA-CREFs customer service representatives.
The company has taken steps to improve functionality functionality of the platform and service to institutional and individual clients is the companys top priority, said Chad Peterson, a TIAA-CREF spokesman, in New York.
As of last week, TIAA-CREF had hired 48 new employees to process pay-in and pay-out transactions. Its also enhanced its Web site so that clients can complete more transactions online. The company, saw a change in CTO, naming Peter Murphy to replace Sue Kozik.
“Were fixing the root causes,” said Peterson. “We have more work to do, but were making progress.”
33 Complaints Filed
The New York State Insurance Department, another oversight board for TIAA-CREF, received 33 complaints from customers from Jan. 1 to date.
According to Andy Mais, spokesman for the department, 25 of those claims were upheld or adjusted in the consumers favor, two were turned down and one complaint was referred to another jurisdiction. There are five outstanding complaints that are currently open.
“The whole thing is just a joke—a very scary joke. I am 66 years old and looking to retire,” said Susanna Rechlitz, a beleaguered TIAA-CREF customer who works in accounting at a medical school and filed a suit with the New York agency. “Theyre using this computer upgrade as the constant, constant blame for all this nonsense. Thats been almost a year-and-a-half ago. I work [in accounting] for a medical school. We upgraded our system. Yes, there were glitches, but you called someone in and no matter what the cost, you fixed it. Were dealing with peoples payroll.”
Rechlitz has contacted her states attorney general and is considering hiring an attorney to settle matters with TIAA-CREF.
Rechlitz, like others who contacted eWEEK, is having issues with her contribution calculations as well as a loan payment that hasnt been accounted for—leaving her in arrears with an outstanding loan, despite sending a check to TIAA-CREF to pay off the balance. Rechlitz said there have only been a couple of other employees at her institution affected by the issues at TIAA-CREF. Thats not the case at other institutions.
TIAA-CREFs Own Employees Speak Out
While the SEC does not reveal specific complaints against companies, a number of TIAA-CREF customers posting to the Consumerism Commentary personal finance blog report that they have, in fact, filed complaints with the SEC and other regulatory bodies after numerous issues.
The raft of nearly 40 blog postings on the Consumerism Commentary Web site reveal that the ongoing issues with the companys financial systems upgrade project are also deeply impacting TIAA-CREFs employees.
“I am a former employee having worked [at TIAA-CREF] for many years,” wrote one blog poster. “Most importantly I am also a customer…Having worked there for so long my assets are substantial. I have also experienced poor service and have been given the wrong information. Unlike the general populace, I can get access to more senior level consultants to correct the problems, but even then it takes too long.”
To read TIAA-CREFs response to its customers complaints, click here.
The poster went on to comment that 42 percent of TIAA-CREFs employees have been at the company two years or less. “Morale is extremely poor. It is no wonder that service is poor. Dont blame the employees. When the current CEO came on board several years ago, there was a need for change and improvement. He seemingly had a plan. However, the execution has been dreadful. Attempts to correct the initial problems have made the situation worse…it is astounding that the Board of Trustees has let this continue.”
Another poster to the Consumerism Commentary blog, a senior consulting representative who worked at TIAA-CREF for eight years and left last year, was “quite candid” about the scope of problems at the company. “Management has seen to it that, if an employee is honest to participants about the problems, they are soon pressured to leave,” wrote the poster. “I speak from direct experience… [TIAA-CREF] may be a giant in the industry but their problems are simply not being addressed by management.”
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