Newly hired federal employees participating in the $313 billion Thrift Savings Plan, Washington, would have automatic escalation of their contributions under legislation introduced in the Senate.
Since 2009, federal employees have been automatically enrolled in TSP at a default employee contribution rate of 3% of salary. The employer contribution for the $412 billion Federal Employees Retirement System is capped at 5%. FERS is one of three federal retirement systems participating in TSP along with the Civil Service Retirement System and uniformed services, but it is the only one with an employer match.
The proposal, introduced Monday by Sen. Daniel Akaka, D-Hawaii, would authorize the Federal Retirement Thrift Investment Board overseeing TSP to add auto escalation of 1% per year for at least two consecutive years, to reach a savings goal of 5%. Employees could opt out of either feature.
Only an estimated 9% of TSP participants contribute less than the 5% goal, according to Mr. Akaka, but the change would help lower-paid workers, who make up most of that 9% who save at a lower rate.
The proposed Save More Tomorrow Act mirrors private-sector changes made in the Pension Protection Act of 2006, which enjoyed bipartisan support, Mr. Akaka noted in his Senate floor remarks. “This act represents the best in serious, evidence-based policymaking,” he said.
Mr. Akaka is chairman of the Senate Homeland Security and Governmental Affairs subcommittee with jurisdiction over the federal workforce, but no hearings have been scheduled.