What Effect Does Automatic Enrollment Have on TSP Savings Habits?

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By on January 21, 2020 in Retirement with 0 Comments
3 jars of coins side by side with a larger amount of coins in them going from left to right with green plants growing out of the top of the two larger ones; a close up of a man's hand puts money into the first jar as he adds to his retirement savings

A recent report from the Congressional Budget Office analyzes the effect of automatic enrollment and the government’s matching contribution on the number of federal employees who contribute to the Thrift Savings Plan.

It may not surprise you to learn that automatically enrolling federal employees into the TSP has increased their retirement savings rate. What you may find surprising, however, is the extent to which it increases the savings rate.

This table from the CBO report shows a comparison of employees hired before and after automatic enrollment was implemented:


Hired Before AE (Hired between August 2009 and July 2010)Hired After AE (Hired between August 2010 and July 2011)
TSP Behavior

Percentage of workers who contribute60.096.7
Average contribution rate (As a percentage of salary)2.94.4
Average contribution rate for those who contributed (As a percentage of salary)4.84.5
Percentage of workers whose whole portfolio is invested in the G Fund76.079.7
Pecentage of workers’ portfolio invested in the GFund84.385.5
Average ratio of balance to pay0.20.2
Sample Size51,73253,386

There is a considerable difference in the participation rates in the two sample sizes.

Those data also provide a glimpse into how many federal employees have their money in the G Fund – a lot as it turns out given that 80% of those hired after implementation of automatic enrollment have 100% of their TSP portfolio in the G Fund.

The data from the study also looked at the impact of the government’s match on TSP participation rates. The match was instituted when the Federal Employees Retirement System (FERS) was enacted in 1984. Federal employees under this retirement system are eligible for a match from the federal government.

This table from the CBO report shows data on percentages of federal workers who contribute to the TSP who were hired before and after the government match was instituted in 1984:


No Match (Hired in 1983) Match (Hired in 1984) 
TSP Behavior

Percentage of workers who contribute69.591.7
Average contribution rate (As a percentage of salary)5.99.2
Average contribution rate for those who contributed (As a percentage of salary)8.510.0
Percentage of workers whose whole portfolio is invested in the G Fund16.724.1
Pecentage of workers’ portfolio invested in the GFund45.553.1
Average ratio of balance to pay0.82.5
Sample Size90,533133,015

CBO says it conducted the study because the effects of an employer match and automatic enrollment have been studied extensively in the private sector but the results of those studies are difficult to extrapolate to the public sector.

Data buffs will enjoy perusing the report. It gets into a lot more technical detail about the study and results found.

The Effect of Employer Matching and Defaults on TSP Savings Behavior

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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