Financial Literacy Month has been around since 2003 and the importance of financial literacy has been recognized by the Office of Personnel Management as an important aspect of their training guidance since 2007.
OPM was required by the Thrift Savings Plan Open Elections Act of 2004 to “develop and implement a retirement financial literacy and education strategy for federal employees”, and in 2007, they issued Benefits Administration Letter 11-104, which pushed this strategy down the ladder, making it the responsibility of individual federal agencies.
OPM requires agencies to: 1) educate federal employees on the need for savings and investment; 2) provide information on how to plan for retirement; and 3) provide information on how to calculate the retirement investment needed to meet financial goals.
In 2015, a Government Accountability Office (GAO) forum suggested that employers include education in such areas as everyday budgeting and money management to their financial education menus.
Many federal agencies have been providing financial education to their employees in the form of pre-retirement seminars for many years. When I began working for the Department of Treasury in 1980, they had a long-standing requirement (reflected both in the agency’s manual and in the negotiated labor agreement) that a pre-retirement seminar must be offered to all employees who were within five years of retirement.
Such a requirement is a good starting point but, to be realistic, financial education needs to begin much earlier in an employee’s career. This is especially true with the FERS retirement system and the importance of the Thrift Savings Plan, both of which didn’t even exist back in 1980. It is heartening that more and more agencies are beginning to offer mid-career and new employee financial education.
In a 2015 report, OPM stated that 97.5% of agencies that submitted a report to OPM on their financial education plans (39 of the 40 respondents) conducted pre-retirement seminars of some type for their employees. What if your agency does not provide financial literacy education? Contact your Human Resources office and inquire what types of education they do provide in this area.
All of you who are reading this article are to be commended for taking extra steps to improve your level of financial and retirement knowledge. In addition to the bi-weekly TSP Investor’s Report, FEDweek publishes a weekly Retirement and Financial Planning Report and, of course, there’s the original FEDweek Weekly Newsletter.