TSP to roll out new funds in two weeks

Participants in the Thrift Savings Plan can allocate money to new "life-cycle" funds starting Aug. 1, the TSP Board announced Monday.

The TSP, which is a 401(k)-like system for federal workers, currently has five investment funds. This sixth set of funds will allot resources among the five already existing options: government securities, fixed income securities, common stocks, international stocks, and small and mid-size companies.

The concept behind the new funds is to automatically shift investors' money from a mix of riskier to more conservative investments as participants age, according to TSP literature.

"Proper asset allocation is critical to optimum long-term growth in retirement savings," TSP Executive Director Gary Amelio said.

There will be five different "life-cycle" funds available based on the dates participants think they will begin withdrawing money from their TSP accounts.

For participants who foresee retirement around 2040, for example, 42 percent of their money will be invested in common stocks and 5 percent in government securities, the most conservative fund.

Participants who predict retirement around 2010, on the other end of the spectrum, will have 43 percent of their funds put into government securities and 27 percent in common stocks.

Amelio said surveys "have all shown that about 90 percent of plan participants either never ever reallocate their account balance or do so less frequently" than they should. "A great number of participants either never get on, or fall off, the participant frontier," Amelio said.

The TSP Board hopes the new fund will work to correct this problem.

As of Monday, information on the funds was available on the TSP Web site. That information will be followed by a postcard and subsequently a DVD explaining the new fund, which will be mailed to all 3.4 million TSP participants.

On Aug. 1, participants will be able to allocate new funds, or transfer money from other funds, into a "life-cycle" fund through the Web site or by phone. Initially, Amelio had discussed a date of July 1 for possible rollout.

The new funds will operate at no additional cost to TSP participants, according to Amelio. Participants can continue to make their own investment decisions and put money into the other five funds as they wish.

Despite discussion in the past of making the "life-cycle" funds the default for participants who do not designate specific funds for their money, the default fund will remain the G fund for the time being, according to TSP spokesman Tom Trabucco.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.