Sen. Daniel Akaka, D-Hawaii, today introduced a bill that would automatically increase the Thrift Savings Plan contributions of some new federal employees. The Save More Tomorrow Act would only apply to automatically-enrolled feds — that is, new employees who make no choice on TSP and are automatically enrolled in the G Fund at 3 percent — and would boost their contributions by 1 percent each year.
Akaka’s office said this would help push more feds to invest 5 percent of their paychecks in their TSP. That’s the amount federal employees have to contribute to get the maximum matching contribution from their employing agency. The Federal Retirement Thrift Investment Board, which governs TSP, has repeatedly expressed concern that many federal employees are leaving money on the table by not contributing 5 percent.
Said Akaka:
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. Congress should incorporate this best practice into the TSP.
3 Comments
So, who gets to ‘borrow’ against this increase in deductions?
If I dont want to contribute 5% to my TSP that is my choice. As an adult employee I should be responsible for my own retirement planning. The government should not tell me how much I should contribute or force me to contribute. All they do is borrow from it anyway. So in a sense they are forcing me to give them more money to borrow from.
@Sam: This, like the current program, won’t force anyone to do anything they don’t want to do. It’s simply a change to the automatic deductions made for employees who *do not* make an election. The election doesn’t have to be of an amount to contribute, but can be an election not to contribute. Either way, an election must be made to avoid the deduction.