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Federal Daily News

Bill would help boost TSP contributions

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.


 

Reader comments

Wed, May 23, 2012 Zyd

Great idea for the automatic 3% in TSP. Maxing out at 10% is great if you are in the GS-9 and above level. It's not as easy with those below the GS-9 grade especially if you have other priorities (family, home, etc). Not having a pay raise in two years has not help either. Whatever pay raise we get in the future put have in your TSP for tomorrow and the other half in your pocket for today's expenses..

Tue, May 22, 2012

"3% increase in automatic TSP contributions" - Ayone who doesn't want to contribute towards their own retirement can simply opt out. Of course you've got to be a fool to turn down free money and perhaps the best financial decision anyone can make - that is doubling your money! In any event its doubtful anyone can retire by contributing only 5% of income in their TSP account. 10% should be a minimum and all should strive to max out their TSP accounts every year.

Fri, May 18, 2012

Ok, so now we see 5% increase in retirement contribution, 3% increase in automatic TSP contributions, no pay raises for two or more years...who is really going to want to stay in the Federal Government? Probably only those who believe the falsehood of Federal pay being higher than the same job in the private sector!

Fri, May 18, 2012

yes, so all these changes that the federal government wants for federal workers - do these changes include the Senate and the House? And are they still getting bonuses because, for sure, we are not.

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