Thrift Inspection

The Thrift Savings Plan, which is the government's answer to private 401(k) retirement savings plans, has a whopping $167 billion in assets from about 3.5 million participants. That's 167 billion reasons to check up on the performance of those investments.

First, a quick review of options. The TSP has five individual funds. The G fund invests money in ultra-safe government securities. The F fund invests in fixed income securities, the C fund in common stocks, the I fund in international stocks and the S fund in small- and mid-sized companies. The plan also offers the life-cycle (L) fund, which allocates your money among the five existing funds, shifting more into conservative options as you near retirement.

Star Performer

The TSP's international investments have been the star performer over the past twelve months. As of September 2005, the I fund had a 25.74 percent return on investments. That compares with a 22.11 percent return for the S fund, 12.27 percent for the C, 2.81 percent for F and the steady 4.35 percent return for the G fund.

For September, the I fund boasted a 3.68 percent return, much higher than any of its fellow funds. The closest competitor was the C fund, with a 0.84 percent return that month.

But investors either aren't paying attention or are hesitant to switch funds based on relatively short-term success. As of September, only about $10 billion, or 6 percent, of the total TSP funds were invested in the I fund.

TSP Executive Director Gary Amelio said that chasing funds with high returns won't always yield the best long-term results, however. Investors may do better by riding out the ups and downs of the market.

"What most investment professionals will tell you is when you're in the market over a ten-year span, all your growth [will occur] in eight days," Amelio said. "No one knows when that eight days occurs."

Not Alone

It's not only the I fund that TSP participants are ignoring. A large percentage of all the money invested in the TSP is put into either the G fund or the C fund. They're the only ones that even make double-digit allocation numbers.

Here's the breakdown of who's in what fund as of September:

Federal Employees Retirement System

• G fund: 37 percent
• C fund: 41 percent
• F fund: 6 percent
• S fund: 7 percent
• I fund: 6 percent

Civil Service Retirement System

• G fund: 42 percent
• C fund: 39 percent
• F fund: 6 percent
• S fund: 6 percent
• I fund: 5 percent

The new L funds could change all of that, if they catch on. For a participant with an expected retirement date around 2040, the L fund puts 5 percent in the G fund, 42 percent in C, 25 percent in I, 18 percent in S and 10 percent in the F fund.

Money in the G fund has dropped significantly, the TSP Board reported, from 52 percent in June 2003 to 37 percent. Part of that decrease may be because of the G fund's comparatively weak performance, which decreases the value of the money in the G fund as it stacks up against the other funds and makes it a smaller piece of the pie.

Participation

The average account balance of federal employees in retirement savings plans is higher than that of non-feds, TSP administrators reported. The average FERS participant has $56,000 in his or her TSP account. CSRS participants have $47,000 invested. In Individual Retirement Accounts, or IRAs, the average balance is $40,000, the administrators of the federal plan said.

There's an 86 percent participation rate for FERS employees in the TSP; Amelio said private 401(k) plans attract about 70 percent participation on average.

Money for Nothing

There are thousands of current or former federal employees who seem to have abandoned their TSP accounts. While the numbers haven't been updated recently, as of April 2003, 14,300 accounts were declared abandoned.

The TSP keeps a list of lost participants that is searchable by name, state of residence or employing agency. A participant can reclaim his or her savings by filling out this form and providing the proper documentation.