Automatic Enrollment in TSP Considered

An idea that has been pending before the TSP governing board for some time and that may be nearing a decision point would require that newly hired employees be enrolled in the program automatically. Officials have expressed concern for some time that new employees—who by definition are put under the FERS system—are missing out on the government contributions available to them. Currently, about one in six FERS employees don’t invest any of their own money in the TSP and thus get only the automatic 1 percent of salary government contribution. Recently enacted legislation (PL 109-280) encourages employers offering such tax-favored plans to enroll employees automatically; according to the Congressional Research Service, about a third of such plans with more than 50 participants already have automatic enrollment. Also under consideration at the TSP for some time is setting the L fund most closely matching the person’s retirement eligibility date as the default fund for investors who do not choose investment allocations; currently the G fund is the default fund.