TSP reforms boost enrollment
A change to the Thrift Savings Plan that requires agencies to begin contributing immediately to their employees' retirement accounts has added 105,000 participants to the program since May.
Renee Wilder, director of the TSP's Office of Research and Strategic Planning, said the rise in enrollment was "roughly equivalent to the increases for the entire previous year." The total number of plan participants rose from 4,080,000 in May of this year to 4,180,000 in July.
The automatic contributions program, which took effect during the June 21 payroll cycle, requires agencies to begin immediately making contributions to their TSP accounts equivalent to 1 percent of employees' salaries, without waiting for them to open an account and start contributing to it.
The TSP moved to implement automatic contributions after legislation passed in June (H.R. 1256) to modify certain plan programs. Gregory Long, TSP's executive director, said increases in participation could continue at the current rate or even accelerate into next spring, when the plan implements the legislation's automatic enrollment provision.
Under that change, new federal civilian employees will be enrolled in the TSP as soon as they begin their jobs, and 3 percent of their salary automatically will be invested in the government securities fund, the most stable of the plan's offerings. Employees can opt out of the program, or contribute a different percentage of their pay, and can direct their contributions into the plan's other funds.
Other elements of the law will take longer to put in place, Long said. The creation of a Roth 401(k)-like option in the plan will take up to two years, and the TSP is still in the planning stages of developing that benefit. Similarly, a change that allows the spouses of deceased federal employees to continue investing in the TSP, instead of requiring them to close out those accounts after their spouse's death, could require an interim solution before it is implemented fully, Long said.
Two reforms to the TSP that are unrelated to H.R. 1256 will take place next year. The plan will launch its redesigned Web site during the first quarter of 2010. The new site will be able to respond to e-mail queries from participants about the plan and their accounts, a feature the TSP currently does not have.
And because the L 2010 Fund, which moves participants from aggressive to more conservative investments as they near retirement, will expire at the end of next year, the TSP is working on the design of a L 2050 fund to replace it.
Long said although creating a new fund is part of the TSP's regular duties, it is "a surprisingly large project. It does touch a large amount of the communications, accounting, investments and record-keeping functions here."