TSP Adopts Slight Budget Decrease for Fiscal 2022
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The agency that administers the federal government’s 401(k)-style retirement savings program on Tuesday adopted a $496.8 million budget for fiscal 2022, a slight decrease from the $498.4 million approved for this year but still more than the level two years ago.
The Federal Retirement Thrift Investment Board approved the new budget for the Thrift Savings Plan at its monthly meeting Tuesday. TSP Executive Director Ravindra Deo said 2022 will mark the second of an overall three-year uptick in spending for the agency, as it implements multiple major upgrades to how it operates. Last year, the TSP board approved a marked increase in the agency's budget, which is funded through participant fees, to accommodate these projects.
“Our goal over the next five years is to become more focused on participants and the agency, rather than just on technology and cybersecurity,” Deo said. “Technology and cybersecurity are always going to be a focus, but we’ve made enormous progress over the last five years, so they don’t have to be top of mind anymore. We’ll be providing retirement outcomes and top tier services to our participants.”
Part of the uptick in spending comes from the TSP’s ongoing transition to a new recordkeeping service, a project now referred to as Converge by the agency, which is slated to be completed next year. That project will enable the TSP to offer several features long requested by participants, like access to mutual funds, a mobile app and e-signature capabilities.
The increased funding also will cover upgrades to other agency systems, including IT and financial services management. After fiscal 2023, officials expect the annual budget to fall to a new plateau of around $445 million.
With the expected continued growth in the number of TSP participants, Deo said the agency expects the budget’s cost to individual participants to fall from $79 this year to $57 in fiscal 2026. Measured in comparison to the assets the TSP maintains, the fiscal 2022 budget will be 6.8 basis points—or 0.068%—while by fiscal 2026, that ratio will drop to 4.5 basis points.
Key to the various projects’ success will be employees’ ability to learn the new systems quickly as they come online, Deo said.
“This model will be a new operating model for us, and we have to adapt and evolve to make sure that our people are comfortable running in that new network,” he said. “We need to focus agency staff and making sure we’re ready to do all of it successfully, because as always, we have to run the Thrift Savings Plan seamlessly for participants while these transitions occur.”