More employers are expanding the automatic savings features in their retirement savings programs similar to the TSP, a report has found, providing room for the TSP to follow suit in that area as it has in others.
In recent years the TSP has been revising policies in a number of areas to catch up with trends in private sector 401(k) plans and similar savings vehicles. One of those involves automatic enrollment of newly hired employees, who must now opt out of the program if they don’t wish to invest personal money rather than opt in if they do.
In the TSP the automatic enrollment is at 3 percent of salary, but a study by the Aon Hewitt consulting firm found that slightly above half of private employers require 4 percent or more as the default figure. That’s up from about two-fifths at that level or above in 2013.
Another trend is what is called “back-sweeping”—automatically enrolling all employees who are not personally investing, capturing those who first became eligible before automatic enrollment for new hires started. Currently, 16 percent of companies do that, double the number of 2013, it said.
In the TSP, about nine-tenth of federal employees invest personally, a figure that has crept up from about 85 percent since the start of automatic enrollment in 2010. However, there remains a segment of the eligible population, particular among the CSRS population, who have never opted in; the TSP has repeatedly expressed concern about whether such persons affirmatively don’t want to invest or whether they simply never got around to it.