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TSP pushes automatic enrollment of new troops

Lawmakers are expected to move forward with legislation this week that would enroll new service members in the Thrift Savings Plan automatically.

Under draft legislation prepared by the board that oversees the retirement savings plan, new military service members and new or rehired civilians would have 3 percent of their basic pay automatically contributed to one of the TSP’s L Funds as soon as they begin work, unless they specifically decline to participate. Members would have 90 days to opt out and receive a full refund.

The Federal Retirement Thrift Investment Board, which oversees TSP, will make its case for automatic enrollment to the House Oversight and Government Reform subcommittee on the federal work force, Postal Service and the District of Columbia on April 29.

The subcommittee’s Web site said its chairman, Rep. Danny Davis, D-Ill., likely will introduce the bill and the subcommittee will vote on it after the board’s testimony.

The board is seeking automatic enrollments to encourage young people to start saving for their retirements early.

The Pentagon has not decided whether it supports automatic TSP enrollment for new military service personnel. If defense officials oppose the plan, the board would remove the troops from its proposal, said Tom Trabucco, the board’s legislative director.

Unlike civilian federal employees enrolled in the Federal Employees Retirement System, military personnel get no matching funds for their TSP contributions. And that is one reason the Pentagon may decide against it, Trabucco said.