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The TSP’s recently released participant survey showed that among FERS participants, 11 percent were not investing any of their own money and another 8 percent were investing less than the 5 percent needed to capture the maximum government match of another 4 percent.

The most common reason was that they could not afford it, cited by half, but another quarter said they simply never changed from their original enrollment account and 13 percent said they are investing outside the TSP.


Meanwhile, a tenth said they didn’t know that the agency matched investments up to 5 percent—a key element of the FERS retirement program. Various other reasons, including that they don’t need to invest at least 5 percent to meet their retirement goals, made up the rest.

Even FERS employees who don’t invest personally still have an account into which the government automatically contributes an amount equal to 1 percent of their salary. The government matches the first three percent of salary personally invested dollar-for-dollar and matches the next two percent of salary 50 cents on the dollar.

Among those surveyed, 27 percent said they are investing exactly the 5 percent needed to capture the maximum match and 50 percent said they are investing more than 5 percent (even though there is no additional match for doing so); the rest said they didn’t know what percentage they are investing.

Starting October 1, newly hired employees will invest 5 percent of salary by default rather than the current 3 percent, a change designed to help more employees capture more matching money. While all investors may change their investment rates at any time, the survey report says that many investors never change from their initial rate due to “inertia,” an effect that it said is more common among those earning less than $60,000 compared with those earning more.

Employees under the CSRS system get no matching contributions; the TSP did not survey them because they are now account for only about 5 percent of the federal workforce.

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FERS Retirement Guide 2022