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Bill would help boost TSP contributions

A key member of the Senate on Monday introduced an "auto-escalation" bill that would automatically increase Thrift Savings Plan contributions for certain new federal employees.

A key member of the Senate on May 14 introduced an "auto-escalation" bill that would automatically increase Thrift Savings Plan contributions for certain new federal employees.

The bill -- introduced by Sen. Daniel Akaka (D-Hawaii), federal workforce subcommittee chairman -- would increase automatically enrolled feds' contribution amount to the G Fund by 1 percent annually for at least three years, boosting the current employee contribution of 3 percent of pay to 6 percent, with the potential for higher contributions in the future.

In a release announcing the introduction of the bill, Akaka said that the Save More Tomorrow Act will make it easier for new TSP participants to save for retirement.

"Pairing automatic enrollment with automatic escalation in 401(k) plans has proven effective in increasing private-sector savings rates," Akaka noted.

Supporters of the bill include retirement savings plan expert Brigitte Madrian of Harvard's Kennedy School of Government.

"Automatic enrollment has successfully increased participation in the TSP; automatic contribution escalation will further help those TSP participants who have benefited from automatic enrollment but who have limited means to save today by automatically and gradually increasing their contributions over time until they are taking full advantage of the employer match," Madrian said.

Akaka also released a statement on the bill for the Congressional Record.

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