Annual Report of the Thrift Savings Plan

Required by §105 of the

TSP Enhancement Act of 2009

June 30, 2019
Annual Report of the Thrift Savings Plan Page 2 of 3

Introduction

In compliance with §105 of the TSP Enhancement Act of 2009, Public Law 111-

31, the Federal Retirement Thrift Investment Board (FRTIB) has prepared this annual 

report which outlines the status of the development and implementation of the mutual 

fund window in the Thrift Savings Plan (TSP) as well as provide participant statistics 

and diversity demographics of the investment manager of the assets in the Thrift 

Savings Fund.

Mutual Fund Window

In 2013, to examine the benefits of and concerns with a MFW, the FRTIB 

assembled a cross-functional team with representation from its operations, legal, 

investment, finance, communications, research, and technology offices. The team 

presented its findings on industry offerings, participant interest, costs, and operational 

considerations to the Board and ETAC in May 2014. However, there were two additional 

areas where the TSP wanted to do additional research – doing a withdrawal survey and 

researching the feasibility of screening the funds offered via the MFW.

In 2014, FRTIB conducted a survey of participants who made post-separation or 

age-based withdrawals, in order to better understand the reasons funds are withdrawn 

from the Plan. The findings of this survey supported our thesis that one of the reasons 

participants withdraw funds from the Plan when eligible is to achieve greater investment 

diversification. This finding supports the Agency’s proposal to add a mutual fund window 

to the Plan. We also learned that financial need and/or desire for withdrawal flexibility 

were the other significant contributors to age-based and post-separation withdrawals.

The FRTIB also conducted additional research on the impact and implications of 

screening the number and type of funds that might be made available in the MFW. 

Screens might be based on the cost or type of funds. We determined that filters may be 

added to the platforms, but would likely cause a significant reduction in the number of 

funds available (i.e. limiting access to SRI, emerging managers and sector funds). The 

Board requested that further research be performed on the costs of a mutual fund 

window, both for implementation and maintenance.

Additional research determined that implementation costs would be roughly $6-

10 million and on-going costs would be roughly $1 million. In July of 2015, the Executive 

Director recommended to the Board Members that a mutual fund window be added to 

the TSP. The Board concurred, with the understanding that if the Agency’s 

understanding of the costs of implementation or maintenance changed significantly that 

the Agency would provide that information to the Board before proceeding.

The FRTIB is in the procurement process currently that will yield a new TSP 

record keeper, as well as a MFW provider. In June of 2018, we posted information on 

the Federal Business Opportunity website regarding the procurement. We currently 

anticipate a contract award by September of 2020 with full implementation by 

September 2022.
Annual Report of the Thrift Savings Plan Page 3 of 3

Investment Manager Diversity Demographics

The attached report (Appendix A) from the TSP investment manager, BlackRock,

provides a breakdown of its employee diversity.

TSP Participant Behavior and Demographics Report

The 2018 Participant Behavior and Demographics Report is attached to this 

report as Appendix B. This report is an analysis of data extracted from the Thrift 

Savings Plan recordkeeping systems.
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APPENDIX A
Thrift Savings Plan 

Participant Behavior 

and Demographics

Analysis of 2014 – 2018

APPENDIX B
2

Introduction

This analysis of Thrift Savings Plan (TSP) participant demographics prepared by the Federal 

Retirement Thrift Investment Board is based on participant data. The analysis of calendar year 

2018 data is similar to analysis of data conducted in the previous year.

As with the 2017 report, the 2018 analysis will focus solely on participants in FERS, the Federal 

Employee Retirement System. Information from this analysis provides insight on demographics, 

investment behaviors and how plan design changes may have influenced participation and 

contribution behaviors. Finally, this analysis helps us identify trends with participant usage of 

benefit options.

Background

The Federal Retirement Thrift Investment Board is an independent Federal agency that was 

established to administer the Thrift Savings Plan (TSP) under the Federal Employees’ 

Retirement System Act of 1986 (See 5 U.S.C. §§ 8351; 8401 et seq.). Similar to the type of 

savings and tax benefits that many private corporations offer their employees under I.R.C.

§401(k) plans, the TSP provides Federal civilian employees and members of the uniformed 

services the opportunity to save for additional retirement security. The Agency’s mission is to 

act solely in the interest of its participants and beneficiaries. 

TSP participants can invest their employee and employer contributions in the following core 

funds:

 Government Securities Investment Fund (G Fund)

 Fixed Income Index Investment Fund (F Fund)

 Common Stock Index Investment Fund (C Fund) 

 Small Cap Stock Index Investment Fund (S Fund) 

 International Stock Index Investment Fund (I Fund) 

In addition to these indexed core funds, participants may also invest in five Lifecycle Funds (L

Funds). The L Funds are custom target-date funds invested exclusively in the G, F, C, S, and I 

Funds.

During the period covered by this report, the TSP underwent one major plan design change. In

September 2015 the default investment switched from the G Fund to an age-appropriate L 

Fund. The ongoing impact of this change on participant behavior will be discussed in this

analysis.
3

Data Collection and Methodology

This report is based on data extracted from the TSP recordkeeping system for all TSP 

participants identified as active civilian Federal employees covered by the FERS retirement 

system.

In the same manner as the 2017 report, agency 1% automatic contributions were used to 

estimate salary. This value is then used to calculate salary quintiles and the average deferral 

rate. This method excludes overtime and performance awards, so does not represent the total 

employee compensation. However, matching percentages are based solely on basic salary 

including locality pay, which excludes overtime and awards. The effect is that the average 

deferral rate (calculated using a smaller denominator) will be higher using this methodology, but 

will match the participant’s elected deferral rate percentage. This effect is expected to be 

roughly equivalent across salary ranges, so the use of salary quintiles will mitigate the impact.

In this report, salaries are shown in quintiles. The first quintile represents the 20% of all records 

in the lowest annual salary band; the fifth quintile represents the 20% of records in the highest 

salary band. 

In summary, the analysis provided in this report is subject to the following limitations:

The calculation of salary based on automatic 1% contributions may modestly distort 

the findings compared to reports prior to 2016, showing a higher rate but one more

representative of the participant’s actual deferral choice.

The inclusion of TSP accounts for employees of the Legislative and Judicial branches 

may modestly alter the findings when compared to reports prior to 2016.

The inclusion of TSP accounts for part-time and intermittent workers is likely to have a 

more meaningful impact on the findings compares to reports prior to 2016. Since this 

group is likely to participate and contribute at lower rates than full-time employees, 

this inclusion will also likely result in a negative bias compared to analysis of only fulltime employees, particularly in the lowest salary quintile.

Employees’ actual deferral rate elections are not included in the TSP databases. 

Therefore, an approximation of annualized deferral rate is calculated by comparing 

the actual total employee contributions to the estimated annual salary rate for each 

calendar year. 
4

Analysis

The following sections of this report examine the behaviors of FERS participants across a fiveyear timeframe ending December 31, 2018 and through the lens of two demographic filters –

age and salary. The exhibits and narratives display the relationships between these 

demographic factors and participant behaviors associated with participation and automatic 

enrollment, contribution deferral rates, investment allocation, and loan and hardship withdrawal 

usage.

Plan Participation

FERS participation rate continues to increase, reaching a new all-time high of 93.3% by the end 

of 2018. Figure 1 illustrates the steady improvement in the participation rate since the 

implementation of automatic enrollment for new hires in 2010. Automatic enrollment provides 

that new employees automatically have 3% of their salary deferred into the TSP unless the

employee makes an active election not to participate in the Plan. Until September 2015, 

contributions for automatically enrolled participants were defaulted into the Government 

Securities Investment (G) Fund. With the passage of the Smart Savings Act, Public Law 113-

255, the default investment fund for new participants changed from the G Fund to an ageappropriate Lifecycle (L) Fund.

Figure 1

Automatic enrollment has also led to similar improvements in the participation of the youngest 

and lowest-paid. Reversing historical precedent, the younger the participant, the more likely 

they are to participate. As these participants are also the most likely to have been hired after the 

introduction of automatic enrollment in 2010, there is a clear linkage between the trend in these 

rates and automatic enrollment. Notably, the gap in participation rates between the highest paid 

and lowest paid continues to shrink dramatically, from a 10% difference in 2014 to 4.4% in 

2018. See Table 1 below:

89.9%

91.1%

91.9%

92.6%

93.3%

2014 2015 2016 2017 2018

Annual FERS Participation Rates
5

Table 1

Annual FERS Participation Rates by Demographic Cohorts

2014 2015 2016 2017 2018

Age

<= 29 94.6% 95.6% 96.8% 96.5% 97.1%

30 – 39 91.3% 93.0% 94.2% 94.6% 95.3%

40 – 49 88.4% 90.2% 91.3% 92.1% 92.9%

50 – 59 89.0% 90.2% 90.8% 91.5% 92.2%

60 – 69 89.1% 89.9% 90.2% 90.8% 91.4%

70+ 87.2% 87.1% 86.9% 87.7% 87.6%

Salary Quintile

Q1 Lowest Paid 85.8% 89.8% 89.1% 91.5% 92.5%

Q2 Lower Paid 84.2% 86.7% 87.7% 89.1% 90.1%

Q3 Mid-Range 89.1% 89.2% 90.2% 90.8% 91.3%

Q4 Higher Paid 93.3% 93.8% 94.4% 94.7% 94.9%

Q5 Highest Paid 95.8% 96.3% 96.6% 96.7% 96.9%

Auto enrollment has resulted in increased participation rates, with approximately 2.5% of auto 

enrolled participants opting out of making contributions. In addition, auto enrolled participants 

have demonstrated a degree of engagement with the TSP as 78% have actively made deferral

changes, interfund transfers or other transactions since entering the Plan. However, as shown 

in figure 2, the 22% who have made no change since being auto-enrolled are mostly in the 

lowest salary quintiles.

Figure 2

0%

20%

40%

60%

80%

100%

Q1 Lowest Paid Q2 Lower Paid Q3 Mid Range Q4 Higher Paid Q5 Highest Paid

Percent of AE Participants

FERS Automatic Enrollment Status by Salary 

Quintile

Auto-Enrolled AE / Subsequent Activity AE / Deferral Change
6

Contribution Deferral Rates

The FERS deferral rate (includes employee Roth, traditional and catch-up contributions) 

dropped slightly during the five years since the implementation of automatic enrollment, from 

8.4% to 7.9% in 2018 as shown in figure 3. The FERS deferral rate exceeds the 6.0% average 

deferral rate (ADP) of other defined 

contribution plans according to Deloitte1

and the 6.7% ADP for automatic plans 

according to Vanguard2. However, it is 

significantly lower than the 9.5% FERS 

deferral rates of the mid-2000s.

This drop is a side effect of automatic 

enrollment. While increasing the 

participation rate by including many new 

participants who would not otherwise have 

been participating, many of these autoenrolled participants have continued to contribute at the 3% default level. This increase in new 

participants at the default level has caused the average deferral rate to slowly decline.

Figure 4 below illustrates the power of plan design on participant behavior. FERS participants

receive dollar-for-dollar matching contributions on the first 3% of pay and 50 cents on the dollar

on the next 2%. The full match is achieved with a 5% contribution. Consequently, deferral rates 

aggregate in the 5-6% range, with 29.6% of TSP contributors being in this range in 2018. The 

impact of automatic enrollment can clearly be seen as the percent of participants contributing 

2% or less shows a steady decline while the percent at the default contribution rate of 3% has 

grown over the last 5 years. Still of significant note, however, 30.3% of participants are not 

receiving the full matching contribution as they are contributing less than 5%.

Figure 4

 

1

“For [Non-highly compensated employees], the median ADP was 6.0% . . ., while the median ADP for [highly 

compensated employees was 7.2%. . . .” Deloitte, Annual Defined Contribution Benchmarking Survey – Ease of 

Use Drives Engagement in Saving for Retirement, 2017 Edition.

2

“Participants in voluntary plans had a deferral rate of 7.0% compared with participants in automatic plans where 

the deferral rate was 6.7%.” Vanguard, How America Saves 2018.

0%

5%

10%

15%

20%

25%

30%

35%

2014 2015 2016 2017 2018

Participants

Distribution of FERS Deferral Rates

0 - 2%

3 - 4%

5 - 6%

7 - 8%

9 - 10%

11 - 12%

13 - 14%

15%

> 15%

Figure 3

8.1% 7.9% 7.8% 7.9% 7.9%

2014 2015 2016 2017 2018
7

The lowest-paid participants are deferring the least – 3.9% less than the highest paid. See table 

2. However, with an average deferral rate of 5.9%, many of the lowest paid are still receiving the 

full match. The youngest participants have the lowest deferral rates with deferrals steadily 

increasing with age.

Table 2

Annual FERS Deferral Rates by Demographic Cohorts

2014 2015 2016 2017 2018

Age

<= 29 4.9% 5.3% 5.3% 5.2% 5.4%

30 – 39 6.1% 6.4% 6.4% 6.4% 6.6%

40 – 49 7.2% 7.2% 7.2% 7.2% 7.3%

50 – 59 9.0% 9.2% 9.1% 9.1% 9.1%

60 – 69 10.2% 10.5% 10.0% 10.3% 10.0%

70+ 11.4% 11.6% 10.8% 11.1% 10.5%

Salary Quintile

Q1 Lowest Paid 5.1% 5.7% 5.5% 5.7% 5.9%

Q2 Lower Paid 7.4% 7.0% 7.2% 7.0% 6.9%

Q3 Mid-Range 7.5% 8.0% 8.1% 7.9% 8.1%

Q4 Higher Paid 8.7% 8.8% 8.9% 8.9% 9.0%

Q5 Highest Paid 9.8% 9.9% 9.8% 9.8% 9.8%

Roth TSP was introduced in May 2012. With Roth TSP, paticipants make contributions from 

after-tax dollars, and their earnings on these contributions are tax-free at withdrawal as long as 

certain IRS requirements are met. While the majority of participants continue to defer only 

traditional (pre-tax) contributions, deferrals to Roth TSP are increasing. For those contributing to 

Roth, their average deferrals were 5.2% as opposed to the average traditional deferral of 7.4%.

While the traditional deferral seems steady around 7.4%, the Roth deferral has been rising. 

(Roth and traditional average deferral rates in Figure 5 do not include catch-up contributions 

which are reflected in the deferral rates shown in Figures 3 and 4.)

Figure 5

Roth deferral rates are highest among older participants, as well as the highest-paid. However, 

most demographic cohorts experienced an increase in Roth deferrals in 2018. 

7.3% 7.4% 7.3% 7.5% 7.4%

4.2% 4.8% 4.9% 5.0% 5.2%

2014 2015 2016 2017 2018

FERS Deferral Rates by Contribution Type

Traditional

Roth
8

Table 3

FERS Traditional and Roth Deferral Rates 

by Demographic Cohorts

2016 2017 2018

Traditional Roth Traditional Roth Traditional Roth

Age

<= 29 4.6% 4.9% 4.5% 4.9% 4.6% 5.1%

30 – 39 5.9% 4.7% 5.9% 4.8% 5.9% 5.1%

40 – 49 6.8% 4.5% 6.8% 4.5% 6.8% 4.7%

50 – 59 8.3% 5.2% 8.7% 5.3% 8.6% 5.4%

60 – 69 9.1% 6.4% 9.9% 6.7% 9.5% 6.4%

70+ 9.8% 7.6% 10.9% 7.9% 10.2% 7.4%

Salary Quintile

Q1 Lowest Paid 5.1% 4.4% 5.3% 4.6% 5.3% 4.8%

Q2 Lower Paid 6.7% 4.6% 6.6% 4.8% 6.4% 5.0%

Q3 Mid-Range 7.6% 5.1% 7.5% 5.1% 7.5% 5.3%

Q4 Higher Paid 8.3% 5.2% 8.4% 5.3% 8.5% 5.6%

Q5 Highest Paid 9.0% 5.2% 9.4% 5.3% 9.4% 5.4%

Investment Allocation 

In Figure 6, we note that allocations to the G Fund increase as the 

age of the TSP’s population increases. This behavior is consistent 

with the expectation that participants shift their investment 

allocation toward the relative safety of guaranteed/income 

producing assets as they approach retirement age. The 

noteworthy exception to this observation is in the grouping of 

participants aged 29 and under. In this age cohort, we note that 

participants invest 24.8% of their accounts in the G Fund, probably 

as a result of the default investment option being the G Fund prior 

to 2015. This is a significant improvement from 2014 when the 

youngest participants held 41.7% of their assets in the G Fund and 

it continues to improve.

Figure 6

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

Percent Allocated

FERS Investment Allocation By Age

G Fund

F Fund

C Fund

S Fund

I Fund

Lifecycle Funds

The youngest participants 

who have the longest 

time horizon to reap the 

benefits of compounding 

returns have 24.8% of 

their assets invested in 

the G Fund.
9

The lowest-paid participants have approximately 46.2% allocated to the G fund as compared to 

the highest paid who allocated only 25.9% to the G Fund. Both are increases over 2017 and 

possibly due to the poor market performance in 2018. See Table 4. 

When examining L Fund allocations, the two youngest age cohorts had the highest level of 

usage at 48.7% and 35.6% while the two oldest age cohorts had L Fund allocations of 17.2% 

and 11.8%. When compared to 2017, allocations for the core funds decreased with the 

exception of the G Fund, for all cohorts. This corresponds to an increase in L Fund and G 

Fund investment. Increase in the L Fund investment is most likely influenced by the default 

investment changing from the G Fund to an age appropriate L Fund in 2015 and increase in G 

Fund investment allocation may be attributed to poor market performance in 2018. See Table 4.

Table 4

2018 Investment Allocations by Demographic Cohorts

G Fund F Fund C Fund S Fund I Fund L Funds

Age

<= 29 24.8% 0.8% 14.7% 7.9% 3.1% 48.7%

30 – 39 25.3% 1.8% 19.4% 12.2% 5.8% 35.6%

40 – 49 24.0% 2.9% 29.6% 12.9% 6.0% 24.5%

50 – 59 32.7% 3.9% 30.3% 9.5% 4.2% 19.3%

60 – 69 43.0% 4.7% 24.6% 7.2% 3.3% 17.2%

70+ 49.1% 5.2% 24.4% 6.5% 2.9% 11.8%

Salary Quintile

Q1 Lowest Paid 46.2% 2.7% 18.7% 7.3% 3.3% 21.7%

Q2 Lower Paid 42.4% 3.8% 27.0% 8.0% 3.5% 15.3%

Q3 Mid-Range 34.3% 3.3% 24.7% 10.3% 4.5% 22.9%

Q4 Higher Paid 29.5% 3.5% 26.9% 11.4% 4.9% 23.8%

Q5 Highest Paid 25.9% 4.0% 32.1% 10.8% 5.0% 22.2%

Of the participants utilizing the L Funds, the allocation is largely as we would expect. Those in 

the age 29 and under cohort were taking advantage primarily of the L2050 Fund. Participants 

who would likely retire between 2027 and 2037 (the 40-49 age group) were in L2030 and L2040

Funds. The age 50-59 cohort was aggregated in the L2020 and L2030 Funds. Participants aged 

60-69 were solidly investing in the L2020, while those 70 and over had the highest allocation in 

the L Income Fund. See Figure 7.

Figure 7

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

Percent Allocated

FERS L Fund Investment Allocation By Age

L 2050 Fund

L 2040 Fund

L 2030 Fund

L 2020 Fund

Income Fund
10

The L Funds' strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a 

particular time horizon. The investment mix of each L Fund becomes more conservative as its 

target date approaches. Thus, the participant only needs to invest in one L Fund in order to 

achieve diversification among the core funds. As shown in Figure 8, the use of one L Fund is 

most common with the two youngest age cohorts – 65.5% for those age 29 and under and 

32.8% for those age 30 to 39. While the percent of participants who invest solely in the F, C, S, 

and I Funds is minor, all age cohorts have a significant percentage of participants investing 

solely in the G Fund. Since 2014, the most significant change can be seen in the younger age 

groups where there has been a significant increase in the number solely invested in one L fund.

This was influenced by the change to an age-appropriate L fund as the default investment in 

2015. See Figure 8.

Figure 8

Loan and Hardship Withdrawal Usage

The TSP allows two types of loans – general purpose and residential. A general purpose loan 

has a repayment term of 1 to 5 years, while a residential loan for the purchase of a primary 

residence has a repayment term of 1 to 15 years. Participants may have only one of each loan 

type outstanding at the same time. Participants may only borrow their employee contributions,

up to $50,000, and the minimum loan amount is $1,000.

Loan usage has consistently been highest among the 30-39 and 40-49 age cohorts, with 

approximately 10% of the participants in these cohorts having an open loan in 2018. These 

rates were essentially unchanged from 2017.

Figure 9

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

FERS 100% Allocation in One Fund by Age

100 % G Fund

100% F Fund

100% C Fund

100% S Fund

100% I Fund

100% In One L Fund

Other Allocations

0%

5%

10%

15%

2014 2015 2016 2017 2018

Percent with Loan

FERS Loan Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70+
11

Participants may take a hardship withdrawal if they have a financial need as the result of a 

recurring negative cash flow, medical expenses, a personal casualty loss, or legal expenses

associated with a divorce. Participants may only withdraw their employee contributions, and the 

minimum withdrawal amount is $1,000. In addition to a 10% early withdrawal penalty if the 

participant is younger than 59 1⁄2, employee contributions are suspended for six months after a 

hardship withdrawal. As a result of the employee contribution suspension, FERS participants do

not receive any Agency Matching Contributions during this period.

Hardship withdrawal usage is consistently highest among the age 40-49 cohort, with 3.8% to 

4.7% of participants in this cohort receiving a hardship withdrawal during the five years covered

in this report. All cohorts experienced a slow decrease in hardship withdrawal until 2018. The 

hardship withdrawals increased slightly in 2018 mirroring 2016 levels.

Figure 10

There is a stair-step pattern of hardship withdrawal usage among the salary quintiles, with 

usage generally declining as salary levels increase. See figure 11. However, the first quintile

presents an exception to this pattern, as hardship withdrawals were lower than those of the next 

highest quintile in each of the years examined. It is important to note that hardship withdrawal 

usage is lower than loan usage among all salary quintiles. In 2018, the second salary quintile 

had the highest usage rate at 5.2%, which is a 1.5% drop from 2013, the peak since autoenrollment began.

Figure 11

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2014 2015 2016 2017 2018

FERS Hardship Withdrawal Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70 +

0%

1%

2%

3%

4%

5%

6%

7%

2014 2015 2016 2017 2018

FERS Hardship Withdrawal Usage by Salary Quintile

Q1 Lowest Paid

Q2 Lower Paid

Q3 Mid Range

Q4 Higher Paid

Q5 Highest Paid
12

Summary

The analysis reveals a continuing improvement in the annual FERS participation rate with a high 

of 93.3% by the end of 2018. In addition, the average contribution deferral rate in 2018 paused

its downward trend, remaining at a flat 7.9%. Automatic enrollment was a contributing factor to 

both of these observations.

Automatic enrollment continues to improve participation among all except the oldest cohort of 

participants. Participants under the age of 29 now participate at a rate of 97.1% – the highest 

rate of participation among all age groups. Slight increases were also present when the 

participation rate was viewed from a salary quintile perspective with the lowest quintiles 

experiencing the largest increase over 2017.

The analysis also revealed that the majority of auto-enrolled participants have “engaged” with 

66% making deferral changes, a slight increase from 2017. Deferral behavior appears to be 

relatively unchanged, as deferral rates continue to aggregate in the 5-6% range, with 29.6% of 

TSP contributors falling in this range, nearly 70% of FERS participants are estimated to be 

receiving the full match (including non-contributors). Participants are still increasing their

contributions to Roth TSP with average Roth deferral rates growing by a full percent since 2014 

to 5.2%. When comparing Roth vs Traditional deferral rates, it is important to note that dollar for 

dollar, the relative value of a Roth contribution is higher than a traditional tax deferred 

contribution as a traditional contribution will have taxes deducted on withdrawal. An exact 

comparison, however, is not possible as it is dependent on the participant’s future tax bracket.

Participants aged 29 and under continue to have a disproportionate percentage (24.8%) of their 

account balances in the G Fund although this is an improvement from 2014 when 41.7% of their 

balances were in the G Fund. However, this group also has the highest utilization of the L Funds

(48.7%). Rapid changes in these ratios appear to be driven by the auto-enrollment default fund 

change. Overall, participants are investing in the L Fund in a manner appropriate for their age 

cohort. Roughly a quarter of participants under 50 are solely invested in the G Fund, a very low 

risk fund which may not be the best option for those with longer investment horizons.

When loan usage is examined by age cohort, the 30-39 and 40-49 age cohorts have the highest 

loan usage rate at approximately 10% each. Loan usage appears to have stabilized year over 

year since 2014. The age 40-49 cohort also had the highest hardship withdrawal usage, with 

just over 4% of participants in this cohort receiving a hardship withdrawal in 2018. From a salary 

perspective, participants in the second quintile have the highest rate of usage of hardship 

withdrawals. The overall trend is for decreasing demand for hardship withdrawals across all age 

and salary groups over the last five years. However, 2018 saw a slight increase in hardship 

withdrawals, comparable to 2016 levels.