The number of military personnel paying into the TSP rose from 38.4 percent in February to 38.7 percent in March. The increase in the participation rate is notable, officials said, considering service members are not eligible for automatic enrollment into TSP and do not receive matching contributions from their agencies.
TSP Executive Director Greg Long said service members are "the source of the future growth of the TSP for decades to come."
Among Federal Employees Retirement System enrollees, the participation rate was 85.2 percent in March, a slight increase from 84.9 percent in February. The increase in participation is due largely to a recently launched program to automatically sign up all new civilian hires to contribute 3 percent of their basic pay to the government securities (G) fund, unless they choose to terminate their contributions or change the amount. As of March, the TSP had 4.4 million participants and $284 billion in funds flowing into the plan.
The TSP also continues to see growth in its new investment fund, the L2050 Fund, according to data presented at the meeting. In March, the number of enrollees in the L 2050 Fund was nearly 23,000, up from 15,645 at the end of February. The TSP on Jan. 31 opened the 2050 life-cycle fund, designed to move investors to less risky portfolios as they get closer to retirement. The fund invests higher percentages in domestic and foreign stocks -- C, S and I funds -- and lower percentages in government securities and bonds (G and F funds).
Long said the introduction of a Roth 401(k) option is on track for the second quarter of fiscal 2012. The option, which would allow employees to invest income that already has been taxed and therefore would not be taxed upon withdrawal, was slated to launch in January 2012. The TSP is delaying the rollout to allow federal payroll offices to adapt to the changes. "Roth is a major, major change to what we are doing here," Long said.
During Monday's meeting, board Chairman Andrew Saul discussed the importance of moving forward on the TSP's modernization efforts. "We need to make sure this plan remains ahead of the curve," he said. The TSP has announced several changes and upgrades during the past few years, from automatic enrollment to accounts for spouses of deceased federal workers or military personnel enrolled in the plan. But an IT snafu associated with the spousal beneficiary participant accounts in December 2010 has forced the TSP to collect more than $58 million in mistaken distributions to plan enrollees.
The TSP also received an unqualified, or clean, opinion on its 2010 financial audit by accounting firm Clifton Gunderson LLP, which did not identify any material weaknesses. The audit cited the fund's risk management framework as a significant deficiency, however. Long said the board has much work to do on proper documentation of the IT modernization process.
This story has been corrected to remove innaccurate information supplied by the Federal Retirement Thrift Investment Board, which regrets the error.