Retirement board proposes increase to auto enrollment rate

New federal employees will contribute more toward their retirement under a recent proposal that increases the minimum automatic employee contribution rate.

The Federal Retirement Thrift Investment Board, in a recent Federal Register notice, is proposing to amend its current regulations to increase the automatic enrollment percentage from 3 percent to 5 for civilian employees and military personnel who are automatically enrolled in the Thrift Savings Plan.

Currently, Federal Employees Retirement System participants hired or rehired after July 31, 2010; Civil Service Retirement System participants rehired after July 31, 2010; members of the uniformed services who began serving on or after January 1, 2018 (BRS participants); and rehired BRS participants, all are automatically enrolled in the TSP at the default rate of 3 percent.

The new rate will go into effect October 1, 2020 and January 1, 2021, respectively. Participants who are automatically enrolled in the TSP as of September 30, 2020 will not be affected by the automatic enrollment rate increase. 

“The TSP’s goal is to help federal employees and members of the uniformed services retire with dignity,” the notice states, adding that as of December 31, 2018, 26 percent of TSP participants were contributing less than 5 percent to their accounts.

All participants may change their contribution rates at any time by contacting their respective agencies.

Reader comments

Wed, Feb 19, 2020 TANSTAAFL

This makes sense. 5% is the sweet spot for agency match, and I suspect most initial / early-career enrollees start there, or work up to it soon. If someone needs to back their contributions off, it's easy enough to change it.

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