Race and gender influence TSP enrollment

Minorities are less likely than nonminorities to participate in the Thrift Savings Plan, according to a recent report from the Office of Personnel Management.

OPM studied federal employee participation in the TSP during 2007, and found that 82.5 percent of minorities compared to 87.8 percent of nonminorities were enrolled in the government's 401(k)-style retirement plan. Among enrollees, minorities contribute about 25 percent less than their white counterparts, and have been a part of TSP for a shorter period of time. TSP participation overall, however, has increased from 2005 to 2007, according to the data.

"The data indicates that the only demographic comparison where minorities may be ahead of nonminorities is within the highest salary level, $150,000 and above," the report said.

There also are discrepancies in TSP participation and contribution levels along gender lines. Women are slightly more likely than men to contribute to the TSP -- 86.4 percent versus 85.8 percent -- but they allocate less money to retirement savings.

According to OPM's data, the average balance of a female's TSP account is 22 percent less than the mean balance of a male's account. The report also indicated that while women begin saving earlier, they are more conservative with their TSP contributions than male co-workers, which could translate into less money at retirement time. The average salary for men in the federal workforce is higher than the average pay for women -- also a factor in retirement contribution levels and wealth accumulation, the report said.

OPM will increase its efforts to educate federal employees about investing in the TSP, said Director John Berry in an April 22 letter to Senate Special Committee on Aging Chairman Herb Kohl, D-Wis., who requested the report. The agency will work closely with unions and benefits officers to boost overall awareness among federal workers about the importance of retirement savings, Berry pledged.

A similar study from July 2009 on the retirement contribution and participation levels of minorities and nonminorities in the private sector prompted the report on the federal workforce. That study, released by the Ariel Education Initiative and Hewitt Associates, found that African-Americans are 7 percent less likely and Hispanics are 6 percent less likely than nonminority employees to participate in 401(k) plans.