Agency expects additional costs associated with the advent of the military's blended retirement system, more IT upgrades.
The board that oversees federal employees’ 401(k)-style retirement savings plan on Monday approved a $309.7 million budget for the Thrift Savings Plan in fiscal 2018, a 20.4 percent increase over this year.
The ramp-up in anticipated spending comes as officials prepare to take on a massive influx in new participants in the TSP when the military services’ new blended retirement system comes online on Jan. 1. TSP spokeswoman Kim Weaver said she expects between 400,000 and 750,000 people to enroll in the program in 2018, followed by 200,000 to 250,000 in subsequent years.
The blended program offers service members an employer match of between 1 percent and 5 percent to the TSP in exchange for a less generous annuity calculation if they stay the full 20 years required to earn pension benefits. All new service members will be automatically enrolled in the new system beginning next year, and current personnel have until Dec. 31, 2018 to decide whether to opt in.
“We already have people at our call centers, at our forms processing [unit] and at the agencies who handle our participants,” Weaver said. “But especially for the first year, when people might have questions about what blended is or isn’t, that we’ll have a bump in calls. And then we’ll just have to see what happens in the out years.”
In addition to preparing for the blended retirement system to go online, TSP officials are planning the agency’s next round of IT upgrades. In the fiscal 2018 budget, $15 million is earmarked specifically for IT projects that are in the pipeline.
In addition to infrastructure upgrades needed to keep pace with growing enrollment, the TSP plans to continue its work to improve in the areas of cybersecurity, the modernization of existing IT systems and to address audit findings.
The fiscal 2018 budget also attempts to address a steady growth in staffing in recent years by providing funding for TSP to lease two additional floors at its Washington, D.C. headquarters.
Weaver stressed that the budget approved by the TSP’s governing body, the Federal Retirement Thrift Investment Board, does not guarantee that TSP participants will see a 20 percent increase in account fees in fiscal 2018.
“We only charge people’s accounts as we spend money,” she said. “So, say we don’t need all of that money, then it isn’t used and it isn’t deducted from people’s accounts.”