TSP sees boost in overall enrollment, new fund participation

The Thrift Savings Plan is continuing to see growth in its new investment fund, along with overall federal employee participation, officials said on Monday during a monthly meeting of the Federal Retirement Thrift Investment Board.

The TSP on Jan. 31 opened a new life-cycle fund, designed to move investors to less risky portfolios as they get closer to retirement. The L 2050 Fund invests higher percentages in domestic and foreign stocks -- C, S and I funds -- and lower percentages in government securities and bonds (G and F funds).

According to Tracey Ray, chief investment officer at TSP, $300 million flowed into the 2050 fund in February, indicating participants likely understood the aggressive nature of the fund and were ready to invest when it opened.

"The message there is a successful launch of the 2050 fund," said TSP Executive Director Greg Long. "It's doing what it's supposed to do."

TSP also has seen a boost in participation so far this year. According to Renee Wilder, director of research and strategic planning at TSP, the number of noncontributing federal workers declined in January from 396,000 to 366,000, the lowest total in recent months. The drop likely is the result of a campaign targeting nonparticipants to encourage them to invest in the TSP, she said. The overall participation rate for Federal Employees Retirement System enrollees grew to 84.6 percent last month, compared with 83.2 percent in December 2010.

The jump in participation also is due to a recently launched program to automatically sign up all new civilian hires to contribute 3 percent of their basic pay to the government securities (G) fund, unless they choose to terminate their contributions or change the amount, Wilder said. Since Aug. 1, 2010, 40,556 newly hired federal employees who initially did not elect to participate have been auto-enrolled in the TSP. An additional 56,229 new hires chose to invest in the TSP.

"We're looking at 97.6 percent of that pool of people coming into the federal government, and that compares incredibly favorably with the percentage of new hires we were capturing prior to auto-enroll," Wilder said. "At the very least they're now saving 3 percent, where before a fair number of them were not saving."

Military personnel are not eligible for auto-enrollment. Because the Defense Department did not provide participation data for January, the number of active-duty participants in the TSP remained stable at 560,796, or 38.4 percent.