August 2, 2010
As of Aug. 1, all new civilian employees are enrolled automatically in the Thrift Savings Plan, the federal government's retirement program.
New hires automatically will be signed up to contribute 3 percent of basic pay to the G Fund unless they choose to terminate their contributions or change the amount. The G Fund is the lowest risk investment of the TSP options. These investments are made in government securities specially issued for the TSP, and investors face only the risk of inflation.
According to the July 27 Federal Register notice announcing the change, government employee unions endorsed the switch to automatic contributions, but provided the Federal Retirement Thrift Investment Board with suggestions on how to ensure new employees were aware of their rights and obligations under the automatic enrollment program.
To address these concerns, the board has provided agencies with a sample notice to send to new hires or rehired employees who are automatically enrolled.
The board also instructed agencies to notify new hires directly of their right to opt out of automatic enrollment and request a refund of any contributions already made. This information will be provided in the TSP welcome letter sent to all employees upon receipt of their first contribution.
The Federal Retirement Thrift Investment Board advises employees who wish to change their contributions to check with their agency payroll office about procedures for changing TSP contributions. Many agencies use electronic systems.
August 2, 2010