Appendix C

Thrift Savings Plan 

Participant Behavior 

and Demographics (FERS) 

Analysis of 2017 – 2021 
 

 

 

 

 

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 

2021 data is similar to analysis of data conducted in the previous year. 

As with the 2020 report, the 2021 analysis will focus solely on participants in the Federal 

Employee Retirement System (FERS). 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 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.). Like 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 ten Lifecycle Funds (L 

Funds). The L Funds are custom target-date funds, provided in five-year intervals, invested 

exclusively in the G, F, C, S, and I Funds. TSP added six additional funds, and retired the L 

2020 Fund, on July 1, 2020. 

During the period covered by this report, the TSP underwent two major plan design changes: in 

January 2018, the Blended Retirement System (BRS) was implemented, and on October 1, 

2020, TSP raised the default deferral rate to 5% from 3%. BRS implementation analysis will not 

be covered in this report as it is a separate system from FERS. 

2 
 

 

 

 

 

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 2020 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. The effect is that the average deferral rate (calculated using a smaller 

denominator) will be higher using this methodology but will largely 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 when OPM data was last available, 

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 TSP recordkeeping system does not hold information on a participant’s work 

schedule. However, the inclusion of TSP accounts for part-time and intermittent 

workers is likely to have a more meaningful impact on the findings compared to 

reports prior to 2016. Since this group is likely to participate and contribute at lower 

rates than full-time employees, its inclusion will also likely result in lower estimated 

participation and contribution rates (versus an analysis including only full-time 

employees), particularly for 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. 

3 
 

 

 

 

 

 

 

Analysis 

The following sections of this report examine the behaviors of FERS participants across a fiveyear timeframe ending December 31, 2021, and through the lens of two demographic filters – 

age and salary. The graphics and narratives summarize the relationships between these 

demographic factors and participant behaviors associated with participation and automatic 

enrollment, deferral rates, investment allocation, and loan and hardship withdrawal usage. 

Plan Participation 

The FERS participation rate continues to increase, reaching a new high of 95.5% at the end of 

2021, a 0.9 percentage point increase over 2020 participation levels. Figure 1 illustrates the 

steady improvement in the participation rate since the implementation of automatic enrollment 

for new hires in 2010. The automatic enrollment policy automatically defers 5%1 of new 

employees’ salaries into the TSP unless the employee makes an active election not to 

participate in the Plan. 

Figure 1 

Annual FERS Participation Rates 

95.5% 94.6% 93.8% 93.3% 92.6% 

2017 2018 2019 2020 2021 

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. See Table 1 below. Additionally, with auto-enrollment capturing 

new workers regardless of salary, the gap in participation rates between the highest paid and 

lowest paid continued to shrink from a 7.6 percentage point difference in 2017 versus 3.8 

percentage points in 2021. 

1 Default deferral rate for automatically enrolled participants increased from 3% to 5% on October 1, 2020. 

4 
Table 1 

Annual FERS Participation Rates by Demographic Cohorts 

 

 

 

 

 

Age 

<= 29 

30 – 39 

40 – 49 

50 – 59 

60 – 69 

70+ 

Salary Quintile 

Q1 Lowest Paid 

Q2 Lower Paid 

Q3 Mid-Range 

Q4 Higher Paid 

Q5 Highest Paid 

2017 2018 2019 2020 2021 

96.5% 97.1% 97.0% 97.3% 97.7% 

94.6% 95.3% 95.7% 96.2% 

92.1% 92.9% 93.6% 94.6% 95.8% 

91.5% 92.2% 92.7% 93.5% 

90.8% 91.4% 91.9% 92.6% 93.3% 

87.7% 87.6% 88.2% 88.6% 

91.5% 92.5% 92.9% 93.8% 

89.1% 90.1% 91.1% 92.2% 93.9% 

90.8% 91.3% 91.7% 92.9% 

94.7% 94.9% 95.2% 95.7% 96.4% 

96.7% 96.9% 97.0% 97.4% 

97.1% 

94.6% 

89.6% 

94.9% 

93.9% 

97.7% 

In summary, auto-enrollment has been impactful in increasing participation rates, with 

approximately 1.6% of auto- enrolled participants opting out of making contributions. In 

addition, auto-enrolled participants have demonstrated a relatively high degree of engagement 

with the TSP; 79% have actively made deferral changes, interfund transfers or other 

transactions since entering the Plan. However, as shown in figure 2, the 21% who have made 

no change since being auto-enrolled are mostly in the lowest salary quintiles. 

Figure 2 

FERS Automatic Enrollment Status by Salary 

Quintile 

Percent of AE Participants 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

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

Auto-Enrolled / No Activity AE / Subsequent Activity AE / Deferral Change 

5 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferral Rates 

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

contributions) has previously leveled around 7.9%; however, it has steadily increased since 

2019 (see figure 3). The FERS deferral rate exceeds the 7.1% ADP of other defined contribution 

plans according to Deloitte2 and the 7.2% Figure 3 

ADP for automatic plans according to 

Vanguard3. However, it is still significantly FERS Deferral Rates 

lower than the 9.5% FERS deferral rates of 

the mid-2000s. This drop is likely a side 8.4% 

effect of automatic enrollment. While autoenrollment increased the participation rate 

by including many new participants who 2017 2018 2019 2020 2021 

would not otherwise have been 

participating, many auto-enrolled participants have continued to contribute at the 3% or 5% 

default level. The increase in new participants at the default level caused the average deferral 

rate to slowly decline; however, the increase in the default deferral rate in 2020 from 3% to 5% 

has caused the average deferral rate to begin increasing. 

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 35.2% of TSP contributors being in this range in 2021. 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% grew. 

With the default rate increasing to 5% in October 2020, there is a decline of those contributing at 

3% or less and an increase in those contributing 5-6%. Still of significance, 21.5% of 

participants are not receiving the full matching contribution as they are contributing less than 

5%. This is a decrease of 5 percentage points from 2020. 

Figure 4 

Distribution of FERS Deferral Rates 

7.9% 7.9% 7.9% 8.1% 

Participants 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

2017 2018 2019 2020 2021 

0 - 2% 

3 - 4% 

5 - 6% 

7 - 8% 

9 - 10% 

11 - 12% 

13 - 14% 

15% 

> 15% 

2 “For [Non-highly compensated employees], the median ADP was 6.2% . . ., while the median ADP for [highly 

compensated employees was 7.8%. . . .” Deloitte, Annual Defined Contribution Benchmarking Survey – Ease of 

Use Drives Engagement in Saving for Retirement, 2019 Edition. 3 “The average deferral rate was 7.2% in 2020.” Vanguard, How America Saves 2021. 

6 
The lowest-paid participants are deferring the least – 3.7 percentage points less than the 

highest paid. This interval is again shrinking after expanding in 2020. The interval between the 

lowest and highest paid employees is similar to the interval in 2018. However, with an average 

deferral rate of 6.5%, many of the lowest paid are still receiving the full match. The youngest 

participants have the lowest average deferral rates, with deferrals steadily increasing with each 

age bracket. Deferral rates for all ages and salaries increased in 2021 over 2020. See Table 2. 

Table 2 

Annual FERS Deferral Rates by Demographic Cohorts 

2017 2018 2019 2020 2021 

Age 

<= 29 5.2% 5.4% 5.5% 5.8% 6.2% 

30 – 39 6.4% 6.6% 6.6% 6.8% 7.1% 

40 – 49 7.2% 7.3% 7.3% 7.6% 7.8% 

50 – 59 9.1% 9.1% 9.1% 9.3% 9.5% 

60 – 69 10.3% 10.0% 10.0% 10.2% 10.3% 

70+ 11.1% 10.5% 10.4% 10.5% 10.6% 

Salary Quintile 

Q1 Lowest Paid 5.7% 5.9% 6.6% 6.1% 6.5% 

Q2 Lower Paid 7.0% 6.9% 6.8% 7.0% 7.1% 

Q3 Mid-Range 7.9% 8.1% 8.1% 8.3% 8.7% 

Q4 Higher Paid 8.9% 9.0% 9.1% 9.3% 9.5% 

Q5 Highest Paid 9.8% 9.8% 9.9% 10.0% 10.2% 

Roth TSP was introduced in May 2012, allowing paticipants to make contributions from after-tax 

dollars, and for their earnings on those contributions to be tax-free at withdrawal (as long as 

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

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

Roth, their average deferrals were 5.9%, versus the average traditional deferral rate of 7.5%. 

While the traditional deferral rate has remained in the 7.3-7.5% range since 2017, the Roth 

deferral has been rising. (Note: 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 

7.5%5.0% 

 

 

 

 

 

 

 

 

 

 

FERS Deferral Rates by Contribution Type 

7.4%5.2% 7.4%5.7% 7.5%5.9% 

Traditional 

Roth 

7.3%5.3% 

2017 2018 2019 2020 2021 

7 
Roth deferral rates are highest among our oldest participants. However, almost all demographic 

cohorts experienced an increase in Roth deferrals in 2021 over 2020. (See Table 3.) 

Table 3 

FERS Traditional and Roth Deferral Rates 

by Demographic Cohorts 

 

 

 

2019 2020 2021 

Traditional Roth Traditional Roth Traditional Roth 

Age 

<= 29 4.5% 5.3% 4.7% 5.7% 5.1% 5.9% 

30 – 39 5.9% 5.2% 6.0% 5.6% 6.1% 

40 – 49 6.8% 4.9% 6.9% 5.2% 7.1% 5.5% 

50 – 59 8.6% 5.5% 8.6% 5.9% 8.7% 

60 – 69 9.4% 6.5% 9.5% 6.9% 9.5% 7.1% 

70+ 10.0% 7.8% 10.0% 8.2% 10.0% 

Salary Quintile 

Q1 Lowest Paid 6.0% 5.0% 5.5% 5.2% 5.8% 

Q2 Lower Paid 6.3% 5.0% 6.4% 5.3% 6.3% 5.6% 

Q3 Mid-Range 7.5% 5.5% 7.6% 5.9% 7.8% 

Q4 Higher Paid 8.4% 5.8% 8.5% 6.1% 8.6% 6.4% 

Q5 Highest Paid 9.4% 5.7% 9.4% 6.0% 9.5% 

5.9% 

6.0% 

8.3% 

5.6% 

6.2% 

6.1% 

Investment Allocation 

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 age-appropriate 

Lifecycle (L) Fund. 

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

the age of the TSP’s population increases, with the youngest 

participants only holding 5% of their assets in the G Fund. This 

behavior is consistent with the expectation that participants 

tend to shift their investment allocation toward the relative safety of guaranteed/income 

producing assets as they approach retirement age. This is also a significant improvement from 

2014, when the youngest participants held 41.7% of their assets in the G Fund. 

The youngest participants 

who have the longest time 

horizon to reap the 

benefits of compounding 

returns have 5% of their 

assets invested in the G 

Fund. This is a continual 

and significant decline 

from previous years. 

8 
 

 

Figure 6 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

50 - 59 60 - 69 70+ 

Percent Allocated 

FERS Investment Allocation By Age 

G Fund 

F Fund 

C Fund 

S Fund 

I Fund 

Lifecycle Funds 

<= 29 30 - 39 40 - 49 

As noted in Table 4, the lowest-paid participants have approximately 29.5% allocated to the G 

fund; this contrasts with the highest paid, who allocated only 18.4% to the G Fund in 2021. All 

cohorts have decreased their investment in the G Fund compared to both 2019 and 2020 

investment allocations. 

When examining L Fund allocations, the youngest age cohort had the highest level of utilization 

at 64.6%, which continues to increase each year. The oldest cohort has the lowest level of L 

Fund utilization at 13.9%; this has also increased slightly each year. Increases in L Fund 

utilization is likely influenced by the default investment changing from the G Fund to an ageappropriate L Fund in 2015, as well as the impact of ongoing communications regarding the 

benefits of utilizing the L Funds. 

Table 4 

2021 Investment Allocations by Demographic Cohorts 

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

Age 

<= 29 5.1% 0.4% 19.3% 8.6% 2.1% 64.6% 

30 – 39 13.9% 1.1% 26.4% 13.8% 4.2% 40.6% 

40 – 49 16.2% 2.0% 32.7% 15.3% 5.2% 28.6% 

50 – 59 23.5% 3.2% 36.6% 11.8% 3.9% 20.9% 

60 – 69 32.3% 4.0% 32.4% 9.4% 3.2% 18.7% 

70+ 38.1% 4.3% 32.6% 8.4% 2.7% 13.9% 

Salary Quintile 

Q1 Lowest Paid 29.5% 1.8% 22.4% 9.0% 2.9% 34.5% 

Q2 Lower Paid 32.1% 2.8% 33.2% 10.3% 3.2% 18.5% 

Q3 Mid-Range 24.3% 2.4% 30.5% 12.6% 4.0% 26.3% 

Q4 Higher Paid 20.9% 2.6% 33.0% 13.8% 4.3% 25.4% 

Q5 Highest Paid 18.4% 3.3% 37.5% 12.6% 4.6% 23.6% 

9 
 

 

 

 

 

 

 

 

As discussed earlier, TSP launched 6 additional L Funds and retired the L 2020 Fund in July 

2020. These new L Funds added 5-year L Funds up to the L 2065 Fund and added the L 2060 

Fund. 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; very 

few transferred assets into to the new L 2055, L 2060, and L 2065 Funds. However, utilization of 

the new L Funds (L 2055, L 2060, L 2065) increased for the youngest participants over 2020 

levels. Participants who would likely retire between 2035 and 2045 (the 40-49 age group) were 

in the L 2040 Fund, as we would expect for to retirement investment. The age 50-59 cohort was 

aggregated in the L 2030 Fund. Participants aged 60 and older have their assets split between 

the L Income and L 2030 funds. Participants aged 60-69 are roughly evenly split between the 

two funds, while participants aged 70 and over are mostly in the L Income fund. 

Figure 7 

L 2065 Fund 

L 2060 Fund 

L 2055 Fund 

L 2050 Fund 

L 2045 Fund 

L 2040 Fund 

L 2035 Fund 

L 2030 Fund 

L 2025 Fund 

Income Fund 

FERS L Fund Investment Allocation By Age 

Percent Allocated 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

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

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 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 – 74.4% for those age 29 and under and 46.2% for 

those age 30 to 39. The use of a single L Fund has been increasing each year among the 

younger cohorts. While the percent of participants who invest solely in a singular Core Fund is 

minor, the most common fund used alone is the G Fund. As participants age, they are more 

likely to be solely invested in the G Fund. Investing solely in the G Fund is problematic for any 

age, as the G Fund cannot keep up with inflation. If not invested in a single L Fund, participants 

are most likely allocating across multiple funds. See Figure 8. 

Since 2014, the most significant change has been seen in the younger age groups where there 

was a meaningful increase in the number solely invested in one L fund and a decrease in the 

percentage solely invested in the G fund. This was likely influenced by the change to an ageappropriate L fund as the default investment in 2015. 

10 
 

 

 

 

 

 

 

 

 

Figure 8 

0% 

20% 

40% 

60% 

80% 

100% 

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

Active 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 

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. In 2021, 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. 

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, with a 10% early withdrawal penalty if the participant is 

younger than 59 1⁄2. 

Figure 9 

*Includes CARES Loans 

FERS Loan and Hardship 

Loan usage overall remained 

somewhat steady in previous years 

Withdrawal Usage around 8.7%, but declined 1.5 

percentage points in 2020, and has 

remained low in 2021. Even with 

10.0% 8.8% 8.5% 8.6% the pandemic altering the U.S. 

economy, fewer participants took 

loans. 

6.0% 

3.5% 3.3% 3.7% 2.9% 

4.0% Hardship withdrawals have returned 

to slightly higher levels than those 

seen before the pandemic began. 

0.0% 

2017 2018 2019 2020 2021 

Four percent of participants took a 

hardship withdrawal in 2021. 

Loans Usage* Hardship Withdrawals As seen in Figure 10, loan usage 

mirrors 2020 levels among all age 

groups. However, usage remains 

the highest among the 40-49 age 

7.1% 7.0% 8.0% 

2.0% 

4.0% 

11 
 

 

 

cohort, with 8.6% of the participants in this cohort receiving a loan in 2021. Usage among 

participants aged 50-59 was higher than those aged 30-39, 7.5% and 7.4% respectively; this 

was a flip from prior years. 

Figure 10 

<= 29 

30 - 39 

40 - 49 

50 - 59 

60 - 69 

70+ 

*Includes CARES 

Loans 

FERS Loan Usage by Age 

Percent with Loan 

0% 

2% 

4% 

6% 

8% 

10% 

12% 

2017 2018 2019 2020* 2021 

Hardship withdrawal usage is also consistently highest among the 40-49 and 50-59 age cohorts 

(4.9% and 4.5%, respectively). All cohorts saw an increase over 2020 levels as usage mirrors 

2019 levels. (See Figure 11.) 

Figure 11 

FERS Hardship Withdrawal Usage by Age 

6.0% 

5.0% 

<= 29 

4.0% 30 - 39 

3.0% 40 - 49 

50 - 59 2.0% 

60 - 69 

1.0% 

70 + 

0.0% 

2017 2018 2019 2020 2021 

Hardship withdrawal usage continues its stair-step pattern among the salary quintiles, with 

usage generally declining as salary levels increase. (See Figure 12) 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 (5.3%) for the lowest paid participants is higher than their loan usage (3.8%). In previous 

years, hardship usage has typically been lower than loan usage for all cohorts. 

12 
 

Figure 12 

FERS Hardship Withdrawal Usage by Salary 

Quintile 

7% 

6% 

Q1 Lowest Paid 5% 

4% Q2 Lower Paid 

3% Q3 Mid Range 

2% 

Q4 Higher Paid 1% 

0% Q5 Highest Paid 

2017 2018 2019 2020 2021 

Summary 

An analysis of TSP participant data from 2017 to 2021 reveals that the TSP did not experience 

any unusual shifts in participant activity. Participation continues to slowly increase, likely 

benefiting from the impact of automatic enrollment and the elimination of the 6-month 

contribution suspension when a participant takes a hardship withdrawal. Higher percentages of 

the participant population are taking advantage of the Lifecycle Funds, whether because of 

auto-enrollment or individual choice. Though loan and hardship withdrawals increased in 2021 

compared to 2020, their usage mirrored 2019 levels. Deferral rates have increased slightly, and 

only 21% of auto-enrolled participants are making no change from their default enrollment. The 

TSP implemented a change to the default deferral rate from 3% to 5% on October 1, 2020, with 

the expectation that this change will improve the long-term retirement outcomes for a significant 

segment of the TSP population. For those enrolled prior to October 2020, remaining at the 

default 3% left matching employer contributions on the table. 

13