Individual participants will pay just $5 extra, because the overall number of enrollees in the retirement program has grown significantly.
The board overseeing the federal government’s 401(k)-style retirement savings program voted unanimously Monday to approve a $360.6 million budget for fiscal 2019, a 16 percent increase over current spending.
There are a number of drivers behind the plan to increase spending on the Thrift Savings Plan from fiscal 2018’s level of $309.7 million, chief among them a significant influx of participants from the uniformed services following the launch of the Blended Retirement System. Since that system went live in January, more than 250,000 service members have enrolled in the TSP, bringing the participation rate to an all-time high of 54 percent of all military personnel.
As a result of increasing participation, although next year’s budget marks a 16 percent increase overall, the uptick is only 8 percent, or $5, per participant. TSP Executive Director Ravindra Deo said at a board meeting Monday that a number of ongoing enterprise projects also contributed to the higher budget.
“Continuing a steady state [of operations] is a big portion of the budget every year,” he said. “And while we successfully implemented blended, now we have a new project that we will implement by the deadline of November of next year, and that’s adding additional withdrawal options . . . Financial systems modernization and improving our audit and cybersecurity findings continue to be at the forefront for us.”
The TSP Modernization Act, signed last year by President Trump, requires the agency to develop a system that allows participants to make multiple age-based withdrawals from their TSP accounts and remain eligible for partial withdrawals after they leave government. And those who have left government also would be able to make multiple partial post-separation withdrawals.
Other changes that must be made by November 2019 include allowing those receiving monthly payments to change the amount and frequency of their annuity at any time, instead of once per year. To help cope with the increased work, the TSP will increase its approved staffing level from its current 312 to 322 in fiscal 2019.
In addition to a number of planned upgrades to the TSP’s internal controls and IT infrastructure, Deo said the agency’s budget could again spike in coming years as it prepares for its Plan Operations Modernization Portfolio procurement, which would create a software interface between legacy systems to allow each older system to be replaced more cheaply and easily.
“Currently, with our systems, everything is hard wired,” he said. “We want to insert a software in the middle as a service to allow us to connect them through that mechanism. The advantage is that as we change things out, instead of having to rebuild hardwire connections, we can just change one or two sets of code within that service and have all the systems talk to each other.”
Deo said that he expects that following the installation of that system, budgets will again level off around fiscal 2023. He said he expects spending increases to continue to be “muted” in their impact by growth in participation and in financial markets.