In first two weeks, over 50,000 have signed up for new Thrift Savings Plan funds
August 19, 2005
WASHINGTON — More than 50,000 people have signed up for the new Thrift Savings Plan funds in the first two weeks they were offered, outpacing officials’ expectations.
The new Lifecycle funds, designed to be a mix of current TSP offerings of stocks, bonds and other securities, were introduced Aug. 1. The ratio of each is based on the participant’s age and planned retirement date, with more aggressive goals for younger investors and more conservative moves for those nearing retirement.
The agency is currently offering five Lifecycle funds: L 2040, for those aiming for a retirement date near 2040; L 2030; L 2020; L 2010; and L Income, for those about to begin retirement.
TSP officials have pitched the new funds as a “cruise control” option for their investors, who previously had to divide up their money between several funds to diversify their investments.
And so far, they’re pleased with the response.
“We’re at 30 percent of our goal for participants for the first two years, and that’s in just two weeks,” said Gary Amelio, executive director of the Federal Retirement Thrift Investment Board. “I’m stunned.”
The Thrift Savings Plan, a retirement savings plan for federal employees similar to private 401(k) accounts, has more than 3.4 million participants, about 400,000 of whom are active-duty military.
Amelio said that of the 50,000 people to recently sign up for the new funds, about 10,000 are military personnel. Most of them are younger troops, signing up for the longest-term fund.
“Clearly, that’s a success,” he said. “The idea is they should have much higher yields over their 20- or 30-year work life span, and that means higher account balances.”
Most of the investors choosing the Lifecycle funds are also moving their entire portfolio there, which Amelio said is a sign that participants understand the goal of the new, catch-all funds.
Board officials have already mailed a postcard explaining the new funds and options to all 3.4 million customers, and are planning a DVD mailing further explaining the new funds’ advantages.
More information on the funds and how to change investments is available at: www.tsp.gov.