Survey: Thrift Savings Plan Participants Still Want Greater Flexibility
Officials with the federal government’s 401(k)-style retirement savings program said a new poll shows that 89 percent of participants are happy with the Thrift Savings Plan, although they still largely want greater flexibility in handling their investments.
At a meeting of the Federal Retirement Thrift Investment Board Monday, project manager Lorraine Terry said that while the vast majority of people enrolled in the TSP are happy with the service, 30 percent of active participants said they plan to transfer their money out of the program when they retire.
Of those respondents, 74 percent cited the TSP’s strict rules surrounding withdrawals as a key factor in that decision. Similarly, 35 percent of TSP participants who have already left government said they plan to withdraw from the program when they retire, of which 85 percent want more flexible withdrawal options.
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TSP officials are lobbying Congress to loosen the restrictions on withdrawals. Earlier this month, the House approved the TSP Modernization Act (H.R.3031) by voice vote. The bill would allow federal employees and retirees to make multiple age-based withdrawals from their TSP accounts and remain eligible for partial withdrawals after they leave government as well.
TSP spokeswoman Kim Weaver said she has been in contact with Senate staffers and is hopeful the bill will be advanced quickly in that chamber.
Those who have left government would be able to make multiple partial post-separation withdrawals. And the bill also would allow those receiving monthly payments to change the amount and frequency of their annuity at any time, instead of only once per year.
Currently, feds who wish to make age-based withdrawals can only do so once while employed by the government, and they cannot make a partial withdrawal after they leave their job. Those who have already left federal service can make one partial post-separation withdrawal, but then move to full withdrawal options.
FRTIB partnered with Gallup to conduct the poll, its first poll of participants since 2013. Of the 39,000 sampled, the agency received a 17 percent response rate, up from 11 percent in 2013.
Terry said 86 percent of participants are happy with their annual statement, and around 30 percent of respondents said they changed which funds they invested in or increased their investment amount based on the contents of the statement.
According to the survey, 78 percent of participants invest at least 5 percent of their income into the TSP, while 7 percent contribute no money at all. And a majority of respondents said they would appreciate a tool that shows them a consolidated picture of their retirement savings, including TSP investments, defined benefit retirement programs and Social Security.
Mike Jerue, a TSP statistician, noted that Uniformed Services participants are less satisfied with TSP offerings than their civilian counterparts, an issue that could become more important after the launch of the new Blended Retirement System, which opens the employer contribution to TSP for members of the military, in 2018.
“Addressing their needs may be necessary as we go forward,” Jerue said. “They rated lower on the flexible withdrawal options, and I know some changes may be possible going forward. They also registered lower scores about access to the My Account [feature], and to the TSP website in general.”
An outsized proportion of Uniformed Service participants said they considered mobile transaction capabilities to be a key feature in the future—29 percent, compared to 15 percent for Federal Employees Retirement System enrollees and 7 percent for participants in the Civil Service Retirement System. Jerue said that request held true among service members regardless of age group.
Gallup offered a number of recommendations for TSP to improve its service for participants, and granting more flexibility around withdrawals was top among them. Additionally, the polling organization suggested including a “retirement income requirement” based on a participant’s age and years of service in enrollees’ annual statements.
To address the concerns about Uniformed Service participants’ level of satisfaction, Gallup recommended expanding the hours for the ThriftLine customer service program, as well as conducting targeted outreach to educate them on TSP’s current mobile capabilities.