Readers' Comments
Total Comments: 18
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Should Employees be Automatically Enrolled in the TSP?
Total Comments: 18
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TSP is part of FERS - not an option.
DoD
Mon Oct 1, 2007 9:14 AM
Post Reply
When CSRS was replaced with FERS, TSP was included as in integral part of FERS, one of three pillars of retirement income that FERS employees are to rely upon (TSP, Social Security, and a small federal benefit). It is my understanding that to have the same retirement as CSRS, FERS employees are highly encouraged to enroll and participate in TSP. I am not sure how many do this, or even understand the design and intent of TSP/FERS. I am not sure people understand that TSP is not really optional if they expect to have a CSRS level of retirement. In reality, TSP is mandatory!!!
FERS (TSP + SS + Fed Benefit) = CSRS
Without TSP, the primary retirement income for FERS employees will be Social Security, and we all know where SS is headed, to the SS (sanitary sewer) – what an amazing coincidence.
Automatic enrollment may help, so I am for it!!!
Re: TSP is part of FERS - not an option.
Army
Wed Oct 3, 2007 6:47 AM
FERS RETIREMENT:
TSP (heavy on stock) + SS + smaller basic annuity = Better retirement than CSRS.
CSRS can, at best, replace about 80% of your pre-retirement income. FERS, if done right, will replace 100+% of your working income. It's a great deal.
Re: TSP is part of FERS - not an option.
DoD
Wed Oct 3, 2007 12:58 PM
Another point. Heavy investing in TSP/stocks requires voluntary contributions out of your pocket (reduced take-home pay) not required by CSRS employees. So, if CSRS takes what FERS employees should (must) put into TSP, and invests that into the TSP/IRA’s, etc., then the formula changes again:
FERS (TSP + SS + small fed benefit) < CSRS (CSRS retirement + TSP/IRAs).
So, would CSRS come out on top, if they choose to use their higher take-home pay and invest it in TSP and IRAs? They have a greater take-home pay because TSP is not an integral part of CSRS, it is an optional 401K in their eyes. FERS forces us to use our own money placed in the TSP to have a good retirement – we are funding a large majority of our retirement ourselves.
Auto enroll - they will never miss what they never had.
at what rate?
OPM
Mon Oct 1, 2007 10:22 AM
Post Reply
At what rate would you suggest enrolling people? 1%, 10% or ? Instead of making enrollment automatic, there needs to be a mandatory benefits briefing for all new employees after they've been employed for about a year.
No way!
DOD
Mon Oct 1, 2007 5:13 PM
Post Reply
There was a mandatory benefits briefing when I was hired. Most people don't care about retirement when they first come on board (especially us younger ones). I think we have enough of the government holding our hands as it is.
There shouldn't be any mandatory enrollment that involves an employee's personal money. If they want to change the matching policy, let them. Let's not forget that 1% goes in regardless of any employee action.
Opposed to
Usps
Mon Oct 1, 2007 11:50 PM
Post Reply
While I am in favor of the TSP, I am opposed to automatic or mandatory enrollment of ANY THING that a person has worked has or has earned. First of all once that paycheck is earned, usally between one fifth and one half goes into taxes.
I remember when I was a young soldier with a family, my biggest concern was putting milk and pampers in the house...not a retirement that at best loomed 20 or more years into the future. There was a time back then when it was "highly suggested'',that one participate in the savings bond program. While it was a good idea, (saving). most troops HATED the idea of being FORCED to save.
My current agency, USPS, has the largest single number of participants of any federal agency...This is due in large part to the large number of older workers who tend to save more for retirement. But they do it on a VOLUNTARY basis. None are forced.
SELL the program by showing the good it can do...DO not make it mandatoryand therefore FORCED.
Mandatory TSP enrollment
Specialist
Wed Oct 3, 2007 10:36 AM
Post Reply
While I understand the benefits of automatic enrollment in that it combats inertia and the failure of many people to take advantage of retirement savings vehicles such as the TSP, I don't think automatic enrollment is the answer. When I first started working for the government I had a low paying job and after getting married I had a family to support. Saving for retirement was out of the question. Later when I changed jobs and got a better pay grade I did start saving. I realize I lost out on years of compounding, but that's life. We all have to set priorities. Government can't make all of our decisions for us.
Automatic Enrollment in TSP
Department of the Air Force
Wed Oct 3, 2007 12:23 PM
Post Reply
I favor this option. Unfortunately too many new employees are not taking advantage of this part of their retirement system as retirement is not something in their sights. I say enroll them automatically and give them the option to opt out after one year of service - hopefully by that time they will accept see the advantages of participating in this plan and how it fits into their future. Unfortunate as it may be, sometimes we have to take a proactive stance to protect our employees' futures and to reduce the possibility of having to fund another program to bail people out when they do reach retirement age.
Make it mandatory - up to the agency match
DoD
Wed Oct 3, 2007 3:26 PM
Post Reply
As a CSRS employee, we didn't have that choice and contributed 7% of our income. That was a painful deduction when I was making arond $3.46 and hour as a GS-3 in the mid seventies. Thank God contributing to a retirement account was not an option for us as I struggled to make ends meet. Like many folks, my retirement light bulb did not turn on until my early 40's. However - I am very fortunate that light showed me the value in contributing to optional TSP to supplement my CSRS annunity. I believe contributions should be mandatory for FERS employees up to the matching percentage - they will be thankful when they approach retirement age - it's for their own good until they see the light :)