TSP officials note major growth in plan

Assets in the Thrift Savings Plan grew $6.4 billion in September, the largest increase this year, officials with the retirement savings program said Monday.

At a monthly Federal Retirement Thrift Investment Board meeting, officials overseeing the 401(k)-style plan said last month's growth brought total assets to $231 billion. September's growth was comparable to that of the top 20 private sector 401(k) plans, said Gregory Long, the plan's executive director.

"Over $5 billion [of the growth] was made because of the increase in participants' investments," said Andrew Saul, chairman of the board. "That's huge."

In February, the board predicted that the plan's assets could grow to $300 billion in three years. Since then, the plan's investments have increased by $25 billion.

TSP Executive Director Gregory Long said for the year to date, the TSP cost participants one basis point, or one cent for every $100 invested. Comparable private sector plans can cost 50 to 80 basis points. Come December, however, the plan's cost will likely increase to two basis points, Long said.

Tracey Ray, chief investment officer for the TSP, said there was an increase in transfers last month, specifically with $2.7 billion transferred out of the fixed income bonds (F) fund. Over a 12-month period, participants transferred the most money out of the international (I) fund, moving $19 billion.

Ray cautioned against transferring among funds, noting that increased volatility in the markets in August caused many participants to move out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds. As a result, many participants missed out on a great deal of growth in September and October, Ray said.

Long said plan officials expect to release a report at next month's meeting that highlights the causes and costs of increased transfers among funds.

Meanwhile, TSP Legislative Director Tom Trabucco said the Congressional Budget Office is developing a cost estimate for two legislative proposals that plan officials sent to Congress in late August. The proposals would allow automatic employee enrollment and change the default fund for indecisive investors.

"Hopefully the cost estimate will be low, which will be good in terms of getting the legislation through this Congress," Trabucco said.

Officials also noted that last week's move to replace participants' Social Security numbers with new account numbers was successful, adding that they had anticipated the large number of calls from participants saying they did not receive or had lost their new numbers. Pamela Jeanne Moran, TSP's director of participant services, said the plan has reissued 99,000 account numbers to participants.

"There have been some complaints," Long said. "People now have a 13-digit number that they have to remember. But that's the way of the world."