Thrift Savings Plan. (2012). Participant behavior and demographics: Analysis of 2008–2012 (Thrift Savings Plan 2012)
Thrift Savings Plan. (2012). Participant behavior and demographics: Analysis of 2008–2012.
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- The study’s objective was to determine whether changes in the design of the Thrift Savings Plan (TSP) led to changes in federal employees’ participation in and contributions to the Federal Employee Retirement System (FERS). In 2009 and 2010, TSP instituted two major changes, a decrease in the waiting period for eligibility to receive employer matching contributions and automatic enrollment in a Government Securities Investment Fund (G Fund).
- This study used an interrupted time series design to compare employees’ investment behaviors before and after the TSP design changes. It used data from the TSP record-keeping system and the Office of Personnel Management (OPM).
- Across the TSP participants analyzed, participation in FERS increased by about 4 percentage points from 2009 to 2012, whereas the average deferral rate decreased slightly from the 2008 level. TSP’s design changes were not associated with how often employees monitored their FERS investments.
- The quality of causal evidence presented in this study is low, meaning that we are not confident that the estimated effects are attributable to TSP design changes. Other factors are likely to have contributed.
The Federal Retirement Thrift Investment Board administers the TSP, which gives federal civilian employees and members of the armed forces additional options for saving for retirement. TSP participants can elect to invest their contributions in one of five core funds or in five Lifecycle Funds. This study examined two major changes in investment and savings behaviors among FERS participants from 2008 to 2012:
- In June 2009, new employees became eligible to receive a 1 percent automatic and matching contribution immediately upon hire, rather than waiting the mandatory 6- to 12-month period previously required.
- Beginning in August 2010, new employees were automatically enrolled to have 3 percent of their salary allocated to the G Fund unless they elected otherwise.
This study’s primary data source was the TSP record-keeping system, supplemented with OPM data on participants’ annual salary, length of federal service, and employment status. The sample included data for all full-time executive branch and Postal Service employees with matching data from OPM.
The authors used an interrupted time series design, comparing outcomes for FERS participants in 2008 and 2009 to the outcomes of participants in 2010–2012, in order to observe changes associated with the TSP design amendments implemented in 2009 and 2010. The primary outcomes of interest were FERS participation and automatic enrollment, contribution deferral rates, and investment allocation and activity.
- The study found that FERS participation increased among all TSP participants from 84.7 percent in 2009 (after the economic downturn) to 88.6 percent in 2012.
- The study found that the average contribution rate declined from 2008 to 2010, likely a result of automatic enrollment and the economic downturn. From 2010 to 2012, the deferral rate rose but did not reach the 2008 level.
- The two lowest salary quintiles increased or maintained their deferral rates from 2008, whereas the other quintiles had lower average deferral rates in 2012 than in 2008. However, the results also suggested that automatic enrollment had weaker impacts on FERS participation rates for people in the lowest wealth quintiles.
Considerations for Interpreting the Findings
The analysis excluded certain subgroups of TSP participants: employees without matching OPM records, members of the legislative and judicial branches, and part-time and intermittent workers. In addition, deferral rates were based on a comparison of total employee contributions to the annual salary rate for each year, because actual rates were not available in the data.
The interventions reviewed here were each implemented only once. This makes it difficult to conclude that the observed changes in enrollment rates were driven by the interventions themselves, instead of other concurrent changes (for example, changes in market conditions). Additionally, the study does not address the reasonable possibility that the interventions, and subsequent observed behaviors, occurred in response to existing economic trends.
Causal Evidence Rating
The quality of causal evidence presented in this study is low, meaning that we are not confident that the estimated effects are attributable to TSP design changes. Other factors are likely to have contributed.