New automatic enrollment program could encourage TSP savings

A new Thrift Savings Plan automatic enrollment program should encourage federal employees to save more for retirement, but it is too early to tell if the effort is working as intended, officials said during a monthly Federal Retirement Thrift Investment Board meeting on Monday.

On Aug. 1, TSP launched a program to automatically sign up all new civilian hires to contribute 3 percent of basic pay to the government securities (G) fund, unless they choose to terminate their contributions or change the amount. Participants also will receive a 3 percent match and a 1 percent contribution from their agencies. If employees leave the enrollment program, they no longer will be eligible for the 3 percent match. The G Fund is the most stable investment of the TSP options.

During the board meeting, Renee Wilder, director of research and strategic planning, said no participation data is available yet, but she doesn't expect to see many people opt out of automatic enrollment, which encourages saving.

"If you can't get your hands on the money, you save it," said Wilder, adding that the board will be tracking the program's participants separately from other enrollees to better understand their behavior.

Wilder also reported there was little change in TSP enrollee behavior in July. The overall participation rate was 82.6 percent compared to 82.5 percent in June. The number of active-duty participants in the TSP increased slightly from 551,543 in June to 551,752 in July, but the participation rate remained stable at 37.7 percent. Ready reserve participation dropped slightly from 14.3 percent in June to 13.7 percent in July, but Wilder attributed that to more pronounced fluctuations in reserve personnel.

Several TSP board members in July said they planned to renew efforts to increase military participation and will discuss that strategy during the next meeting on Sept. 20.