TIAA-CREF Systems Struggle

Software bugs try clients' patience.

TIAA-CREF, one of the nations largest private retirement systems, continues to struggle with serious issues with internal systems that have caused delayed access to pensioner funds.

While TIAA-CREF officials said only a small percentage of users have been affected by the infrastructure upgrade snafu, pensioners and employees have put the number closer to 15,000. Some pensioners who still do not have access to funds want to know whats being done to solve the issues. Few concrete answers are coming from TIAA-CREF, so some want to seek help from regulatory authorities.

"I dont understand how they can do this," said one pensioner who has been waiting for rollover funds since late October. "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?"

The problems are the result of difficulties with a major initiative called Open Plan Solutions, a commercial platform that integrates the companys legacy annuity, mutual funds and other service offerings into a single system, according to internal documents obtained by eWEEK. The company also has consolidated its data network, implemented a single data security firewall, put in a new trading and settlement system, developed new desktop systems for customer service agents, and upgraded its financial systems.

At the same time, TIAA-CREF developed the infrastructure to support Open Plan Solutions—or TOPS, as its known internally—and reorganized IT across the company, according to its 2005 annual report.

"We were replacing older software and systems that run our payments processing and online functions," said TIAA-CREF spokesperson Glen Weiner at the companys New York headquarters. "The sheer complexity of upgrading our service infrastructure, including the rollout of our new platform, led to the recent customer service problems."

TIAA-CREF operates as both an insurance and a mutual funds 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 Insurance Department in December that there were some issues in getting funds to customers. 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 department.

Two former TIAA-CREF employees who requested anonymity likewise point to migration issues specifically with TOPS as the culprit for pensioner problems.

"The bottom line is, this project, and the company, is a mess. The code we put into production [we should not] have put into QA [quality assurance], and yet its been put into production," said a former company IT manager. "Peoples bonuses are tied to how many schools they convert to TOPS, and people cant keep up [with manual workarounds]."

One TIAA-CREF participant, Nick Chase, isnt taking any chances. After having a funds disbursement issue solved last month followed by a new IRA funds transfer issue, Chase is moving what money he can to a Fidelity Investments account.

"Anything that involves peoples money—those systems are supposed to be very, very carefully tested before theyre switched over," said Chase, a retired systems manager in Worcester, Mass. "This smacks of testing pressure. My feeling is they were in too much of a hurry and didnt test accurately. If something like this happens, theyre going to lose business. Theyre already losing my business."

TIAA-CREFs Open Plan Solutions

Brings together fixed annuities, variable annuities, mutual funds, homegrown platforms onto single, commercial platform

* Flexible, state-of-the-art record-keeping platform

* Streamlined enrollment process

* Comprehensive remittance services

* Improved Web-based institutional reporting on accumulations, transactions and salary reduction agreements

* New and improved participant quarterly statements

Source: TIAA-CREF 2005 Annual Report