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CBO Report (PDF, Page 2)
<font class="small">Code:</font><hr /><pre>. Annual Admin Cost % Reduction in assets
Social Security: $11/participant 2
TSP (Govt 401k): $25/participant 5
Mutual Funds: 1.09% of assets 23
Private Defined $24-$103 + 0-1% of assets 9-30
Contribution</pre><hr />
The government completely owns the private sector in terms of efficiency for retirement funds.
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Thats not apples to apples comparisons. Social Security does individual contribution record keeping, periodic benefit estimates, a final retirement determination, and annual cost of living increases. Other than gathering the contribution information there are maybe a dozen "touches" preretirement, and one a year post retirement, for a total of 30 or so over a persons lifetime, call it 40 years.
The Govt 401(k) costs are in line with but a little cheaper than private Defined Contribution, and while I dont know anything about the govt 401(k) my guess is that it has fewer investment options than the private DC plan, and lower administrative costs in terms of annual compliance. Also included in that private DC cost is investment advice, which may not be included in the govt number.
The mutual fund comparison is totally irrelevant, they are totally different animals.