TSP Modernizing Effort to Bolster Retirement Security, New Features
An early stage of the Thrift Savings Plan (TSP) modernization effort has been announced by the Federal Retirement Thrift Investment Board (FRTIB) — coined the Converge Initiative by FRTIB employees. An app to access TSP, a mutual fund window, and expanded security functions similar to those provided by banks are part of the initiative.
TSPs provide federal employees with additional retirement security, similar to 401(k) plans in the private sector.
Based on a survey of 36,000 TSP participants, FRTIB found that 57 percent of respondents under 40 were in favor of an app, while 24 percent of respondents over 40 also agreed.
Participants of the TSP will have the opportunity to manage their money on the mobile app, scan checks electronically, and access a concierge service with live TSP customer service representatives to assist with their plans with these new features. By next summer, participants will be able to access thousands of mutual funds outside their core five mutual funds, and a search tool will allow them to filter funds based on personal criteria, providing no trading limits.
Nearly one-third of all TSP participants pull some or all their money into an outside Individual Retirement Arrangement (IRA) or another 401k; however, TSP's relatively low administrative fees and additional oversight has resulted in an impressive and increasing rate of federal employees contributing outside funding into their plans.
Meanwhile, Senate Democrats urged FRTIB to provide more opportunities to invest in diverse asset managers' funds in October of this year. Senator Bob Menendez (D-NJ) joined Senators Cory Booker (D-NJ), Sherrod Brown (D-OH), Ben Ray Luján (D-NM), Tim Kaine (D-VA), Alex Padilla (D-CA), and Jeff Merkley (D-OR) in writing a letter to the Board’s Acting Chairman David Jones. The Senators cited McKinsey's 2020 diversity study, which reported companies in the top quartile for diversity outperformed those in the bottom quartile financially.
“As part of this initiative, I urge you to create opportunities for federal workers to invest in funds run by racially, ethnically and gender diverse asset managers,” stated the Senators, “When it comes to their retirement investments, federal workers deserve the chance to make the strategic and values-driven choice to prioritize diversity.”
The TSP continues to work on the modernization initiative, with guidance expected in early 2022.