2013 Annual Report of the Thrift Savings Plan

Required by §105 of the

TSP Enhancement Act of 2009

June 30, 2014
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) and provides participant statistics and 

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

Fund.

Mutual Fund Window

In 2009, the FRTIB initiated discussions with the FRTIB Board Members 

(Board) and the Employee Thrift Advisory Council (ETAC) about the addition of a selfdirected mutual fund option to the TSP investment lineup. In the April 2009 Board 

meeting, the Board deadlocked on the decision to adopt a resolution in support of the 

mutual fund window (MFW) by a vote of two to two. The fifth Board member was not in 

attendance. ETAC members were similarly divided in their support for the mutual fund 

window. 

In 2013, under order to reexamine 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 are 

two additional areas where the TSP wants to do additional research. 

A review of withdrawal data leads to a hypothesis that a significant number of TSP 

participants are leaving the low-cost TSP to move to higher cost IRAs because they 

are swayed by the financial industry’s marketing efforts which promote the benefits of 

a large menu of investment choices. To determine if this hypothesis is true, the FRTIB 

is designing a survey to reach participants that execute a post-separation fullwithdrawal. Survey results are expected by fall 2014. 

Through a MFW, the TSP could offer virtually any fund available in the marketplace. 

However, the FRTIB is conducting 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, however the utilization of such 

screens may also introduce greater fiduciary risks to the TSP. The additional research 

is underway and findings will be presented to the Board in the fall of 2014.

Investment Manager Diversity Demographics

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

a breakdown of its employee diversity.

Annual Report of the Thrift Savings Plan Page 2 of 4
TSP Participant Behavior and Demographics Report

The 2013 Participant Behavior and Demographics Report is attached to this report as 

Appendix B. This report is an analysis of data extracted from the TSP and enhanced 

with additional indicative data provided by the Office of Personnel Management.

Annual Report of the Thrift Savings Plan Page 3 of 4
Appendix A

Annual Report of the Thrift Savings Plan Page 4 of 4
Participant Behavior

and Demographics

Analysis of 2009 – 2013

Thrift Savings Plan

Appendix B
Introduction

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

Retirement Thrift Investment Board is based on participant data enhanced with additional 

indicative data from the Office of Personnel Management (OPM). The analysis of calendar year 

2013 data is similar to analysis of data conducted in previous years. 

As with the 2012 report, the 2013 analysis will focus solely on participants in FERS, the Federal 

Employee Retirement System, as the participant population in the Civil Service Retirement 

System (CSRS) is a very small and declining segment of the TSP. Information from this 

analysis provides insight on demographics, investment behaviors and how plan design changes 

may influence participation and contribution behaviors. Finally, this analysis helps us identify 

trends with the 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 three major plan design changes. 

The implementation of immediate contributions occurred in June 2009, automatic enrollment 

began in August 2010, and the acceptance of Roth contributions commenced in May 2012. The 

impact of these changes on participant behavior will be discussed in this analysis. It should be 

noted that this is the first report to delve into participant behaviors associated with Roth 

contributions as there was not sufficient experience with Roth to include any observations in the 

2012 report. 

2 | Page
Data Collection and Methodology

This report is based on data extracted from the TSP recordkeeping system, which was 

enhanced with information from OPM. In each year covered by this report, the TSP provided 

extract data on the accounts of all TSP participants identified as active civilian Federal 

employees. OPM enhanced the data by comparing it to their database of Executive Branch and 

Postal Service employees and added data on participants’ annual salary, length of Federal 

service, employment (full-time vs. part-time) status, gender, race and ethnicity, and education. 

Not all records for participants on the TSP extract can be matched with OPM data. In 2013, a 

total of nearly 2.6 million participants were identified by the TSP, and OPM returned data on 

approximately 2.4 million employees. A similar ratio of total records extracted to records 

matched was seen in other years covered by this report. The inability to match some TSP 

records to OPM data occurs when OPM or TSP data is incomplete. Additionally, since OPM 

does not collect data on employees of the Legislative and Judicial Branches, OPM is not able to 

match against those records. Part-time or intermittent employees are identified in the dataset;

however, they are excluded from the analysis because their hourly work schedule (and 

therefore their actual compensation) is not known. While the TSP maintains records for a large 

number of retired or otherwise separated participants, such participants are not active and are 

therefore not considered within the context of this report. Lastly as previously noted, this report 

focuses solely on the FERS population, and records for CSRS participants were excluded from 

the analysis. See the table in Appendix A for a summary of the demographics of fulltime FERS 

participants included in this analysis. The tables in Appendices B and C provide additional 

demographic summaries of fulltime FERS participants based on their contributing or noncontributing status.

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. Data on salary ranges for the quintiles in each year can be found in Appendix D.

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

The exclusion of TSP accounts for employees of the Legislative and Judicial 

Branches may modestly distort the findings. 

The exclusion of TSP accounts that cannot be matched with OPM data may modestly 

distort the findings. 

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

a more meaningful impact on the findings. Since this group is likely to participate and 

contribute at lower rates than full-time employees, the findings may marginally 

overestimate the rates of participation and deferral of the total TSP participant base. 

Employees’ actual deferral rates are not included in the TSP or OPM databases. 

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

the total employee contributions to the annual salary rate for each calendar year. 

Analysis

The following sections of this report examine the behaviors of FERS participants across a fiveyear timeframe ending December 31, 2013 and through the lens of six demographic filters –

age, tenure, salary, gender, race and ethnicity, and education. The exhibits and narratives 

display the relationships between these demographic factors and these participant behaviors: 

3 | Page
participation and automatic enrollment; contribution deferral rates; investment allocation and 

activity; and loan and hardship withdrawal usage. 

Plan Participation

FERS participation was at a five-year high of 89.6% by the end of 2013. Figure 1 illustrates the 

steady improvement in the participation rate since 2009 when participation was down due to the 

lingering impact of the 2008 economic downturn and the implementation of immediate 

contributions in June 2009. Prior to 2009, new employees had to wait a period of six to twelve 

months before becoming eligible to receive agency 1% automatic and matching contributions. 

In June 2009, employees became eligible to receive these contributions immediately upon hire. 

As a result, this change increased the denominator (the number of employees who were eligible 

to participate in the TSP) but did not have a similar impact on the numerator – the number of 

individuals deferring into the Plan.

Figure 1

82%

84%

86%

88%

90%

2009 2010 2011 2012 2013

Participation Rate

FERS Participation Rates 

The economic rebound and automatic enrollment contributed significantly to the improvement in 

participation rates in 2010, with an almost 2% gain – the same year that automatic enrollment 

was instituted. Gains in participation of nearly 1% followed in 2011 and 2012, with a slightly 

lower increase in 2013. Automatic enrollment provides that new employees automatically have 

3% of their salary deferred into the G Fund unless there is an active election not to participate in 

the Plan. Automatic enrollment has meant that not only do participants immediately receive the 

Agency 1% contribution, but they also start deferrals and receive matching contributions 

immediately upon hire. 

When examining participation by tenure bands, the 

impact of automatic enrollment on participation becomes

even more evident. Historically, participation has been 

lowest among the newest employees, those with two or 

less years of employment, with rates of participation 

gradually increasing as the length of tenure increased. 

However, with the introduction of automatic enrollment in 

August 2010, this trend has strongly shifted and now the 

shortest-tenured employees have the highest 

participation rates. As shown in figure 2, participation 

among the shortest-tenured was the lowest at 70.0% in 

After automatic enrollment, 

those with less than twoyears of tenure now have 

the highest rate of 

participation at 98.3%

4 | Page
2009 while the longest-tenured participated at a rate of 90.0%. By 2013, those with less than 

two-years of tenure participated at a rate of 98.3% - the highest rate of participation among all 

tenure bands and almost 9% higher than the band with second highest participation rate. 

Figure 2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013

Participation Rate

FERS Participation Rates By Tenure

Less Than 2

2-5 Years

6-10 Years

11-20 Years

21 Plus Years

It appears that automatic enrollment may have had a similar impact on the youngest and lowestpaid participants as with the shortest-tenured participants. In 2009, the participation rate for the 

under age 29 cohort was the lowest among all age cohorts at 78%, while the age 60-69 cohort 

had the highest participation at 88.4%. By 2013, the youngest cohort had surpassed all other 

age cohorts and had the highest rate of participation – 93.3%. In 2009 and 2010, participation 

rates among the lowest-paid quintile trailed that of the highest paid by approximately 20%. By 

2013, the difference between the two quintiles was reduced to less than 12%. When examining 

participation by race and ethnicity cohorts, participation improved the most among black and 

multi-racial participants during this report period. However, participation among blacks at 83.3% 

lags significantly behind Asians who have the highest participation rate of 95.0%. It should be 

noted that males and females have consistently participated at nearly the same rate for each 

year in this reporting period. See Table 1 below:

5 | Page
 Table 1

Annual FERS Participation Rates by Demographic Cohorts

2009 2010 2011 2012 2013

Age

<= 29 78.0% 83.9% 89.1% 91.7% 93.3%

30 – 39 83.3% 85.7% 88.2% 89.5% 90.5%

40 – 49 84.9% 86.1% 87.1% 87.6% 88.0%

50 – 59 87.1% 88.0% 88.5% 88.7% 88.9%

60 – 69 88.4% 89.0% 89.1% 89.1% 89.1%

70+ 86.6% 87.1% 87.3% 87.5% 87.8%

Tenure

Less than 2 years 70.0% 82.1% 92.6% 98.2% 98.3%

2-5 years 81.9% 83.3% 84.2% 86.7% 89.5%

6-10 years 85.9% 86.8% 88.0% 87.9% 87.6%

11-20 years 88.1% 88.0% 88.2% 87.8% 87.7%

21+ years 90.0% 89.9% 89.7% 89.5% 89.5%

Salary Quintile

Q1 Lowest Paid 71.1% 76.2% 80.6% 82.7% 84.3%

Q2 Lower Paid 82.3% 83.4% 83.8% 83.6% 83.8%

Q3 Mid-Range 86.5% 87.3% 88.3% 89.0% 89.4%

Q4 Higher Paid 89.9% 91.3% 92.4% 92.8% 93.1%

Q5 Highest Paid 94.4% 95.1% 95.4% 95.6% 95.7%

Gender

Female 84.7% 86.6% 88.0% 88.6% 89.1%

Male 85.0% 86.7% 88.2% 88.9% 89.3%

Race and Ethnicity

American Indian or Native Alaskan 79.3% 82.0% 84.2% 85.3% 85.7%

Asian or Other Pacific Islander 90.3% 92.2% 93.7% 94.5% 95.0%

Black or African American 76.7% 79.6% 81.9% 82.6% 83.3%

White 87.0% 89.1% 90.8% 91.7% 92.3%

Hispanic Or Latino 84.0% 86.0% 88.0% 88.9% 89.4%

Multi-Racial 77.7% 84.1% 88.2% 90.0% 91.0%

Unknown 84.6% 84.6% 84.2% 83.9% 84.1%

Education

Without High School Diploma 73.7% 73.7% 76.7% 77.4% 77.8%

High School Diploma 78.1% 78.1% 83.2% 84.5% 85.0%

Some College or Training 82.4% 82.4% 86.3% 87.1% 87.7%

Bachelor's Degree 90.4% 90.4% 93.1% 93.7% 94.0%

Post-Bachelor's Education/Degree 91.6% 91.6% 94.6% 95.1% 95.5%

6 | Page
While automatic enrollment has significantly increased participation among the newly hired, it 

has not, thus far, resulted in a significant increase in the number of participants who remain 

“unengaged” or otherwise make no investment/deferral election. The vast majority of autoenrolled participants are remaining in the Plan, and of this population, 63.2% are actively

making deferral rate changes, while others are showing signs of life by having made interfund 

transfers or other transactions. However, as shown in figure 3, those who remain in the autoenrolled status (no deferral change or investment activity) are mostly in the lowest salary

quintiles.

Figure 3

0%

20%

40%

60%

80%

100%

Q1 Lowest

Paid

Q2 Lower

Paid

Q 3 MidRangeQ 4 Higher

Paid

Q 5 Highest

Paid

Percent of AE Participants

FERS Automatic Enrollment Status by Salary Quintile

(as of 12/31/2013)

Auto-Enrolled

AE / Subsequent Activity

AE / Deferral Change

Contribution Deferral Rates

The FERS contribution deferral rate dropped to 8.2% in 2013 after experiencing a one percent 

increase in 2012 as shown in figure 4. (The FERS deferral rate includes Roth, traditional and 

catch-up contributions). While 63.2% of automatically-enrolled participants change their 

deferrals from the 3% default rate, automatic enrollment, nevertheless, appears to have had a 

dampening effect on deferral rates as rates have consistently been below the 2009 high.

Figure 4

7 | Page
Figure 5 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 30.4% of TSP contributors being in this range in 2013. Of 

significant note, 25.5% of participants are not receiving the full matching contribution as they are 

contributing less than 5%.

Figure 5

0%

5%

10%

15%

20%

25%

30%

35%

2009 2010 2011 2012 2013

Percent of Participants

Deferral Rates

Distribution of FERS Deferral Rates

1 - 2%

3 - 4%

5 - 6%

7 - 8%

9 - 10%

11 - 12%

13 - 14%

15%

> 15%

As expected, the lowest-paid participants are deferring the least – 4.6% less than the highest 

paid. See table 2. However, all salary quintiles had slight dips in 2013 from their 2012 deferral 

rates. Also as expected, the youngest and shortest-tenured participants have the lowest 

deferral rates with deferrals steadily increasing with age and tenure. Deferral rates also 

increase in correlation with education level. During each year in this report period, males have 

contributed about six-tenths of one percent more than females. Deferral rates among blacks at 

5.8%, significantly lags behind Asians who have 

the highest deferral rate of 9.8%, whites at 8.0% 

and Latinos at 7.4%. Participants with less than 

two years of tenure had an 

average deferral rate of 3.8% 

in 2013. In 2009, their 

deferral rate was 4.2%. They 

are the only tenure cohort 

that is not, on average, 

receiving the full match. 

8 | Page
Table 2

Annual FERS Deferral Rates by Demographic Cohorts

2009 2010 2011 2012 2013

Age

<= 29 4.9% 4.7% 5.0% 5.2% 4.9%

30 – 39 6.4% 6.1% 6.2% 6.3% 6.1%

40 – 49 7.7% 7.4% 7.4% 7.4% 7.1%

50 – 59 9.4% 9.1% 9.2% 9.2% 9.0%

60 – 69 10.8% 10.5% 10.5% 10.5% 10.3%

70+ 12.2% 11.9% 11.8% 11.9% 11.6%

Tenure

Less than 2 years 4.2% 3.9% 4.2% 4.1% 3.8%

2-5 years 6.7% 6.4% 6.6% 6.6% 6.3%

6-10 years 8.0% 7.8% 7.9% 7.9% 7.6%

11-20 years 8.8% 8.6% 8.8% 8.7% 8.6%

21+ years 9.5% 9.4% 9.4% 9.5% 9.4%

Salary Quintile

Q1 Lowest Paid 5.4% 5.1% 5.2% 5.4% 5.1%

Q2 Lower Paid 7.3% 7.3% 7.5% 7.5% 7.4%

Q3 Mid-Range 7.9% 7.6% 7.5% 7.5% 7.3%

Q4 Higher Paid 8.7% 8.4% 8.7% 8.8% 8.6%

Q5 Highest Paid 9.9% 9.7% 9.7% 9.8% 9.7%

Gender

Female 7.6% 7.4% 7.4% 7.5% 7.4%

Male 8.3% 8.0% 8.1% 8.1% 8.0%

Race and Ethnicity

American Indian or Native Alaskan 6.5% 6.2% 6.2% 6.2% 6.1%

Asian or Other Pacific Islander 10.0% 9.6% 9.7% 9.9% 9.8%

Black or African American 5.9% 5.7% 5.8% 5.9% 5.8%

White 8.3% 8.0% 8.1% 8.2% 8.0%

Hispanic Or Latino 7.5% 7.3% 7.5% 7.6% 7.4%

Multi-Racial 6.4% 6.5% 6.7% 6.9% 6.7%

Unknown 8.1% 8.1% 8.1% 8.0% 7.9%

Education

Without High School Diploma 6.0% 5.8% 5.9% 5.9% 5.7%

High School Diploma 6.9% 6.6% 6.7% 6.8% 6.5%

Some College or Training 7.4% 7.1% 7.1% 7.2% 6.9%

Bachelor's Degree 8.6% 8.2% 8.4% 8.5% 8.3%

Post-Bachelor's Education/Degree 9.1% 8.7% 8.8% 8.9% 8.8%

9 | Page
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 4.4% as opposed to the 

average traditional deferral of 7.7%. (Roth and 

traditional average deferral rates do not include 

catch-up contributions which are reflected in 

the deferral rates shown in Figures 4 and 5.) 

Deferral rates are highest among older 

participants, as well as the most-tenured and 

highest-paid.

Table 3

FERS Traditional and Roth Deferral Rates

by Demographic Cohorts

 

Traditional Roth

Age

<= 29 4.6% 3.5%

30 – 39 5.8% 3.5%

40 – 49 7.0% 3.5%

50 – 59 8.4% 4.2%

60 – 69 9.5% 5.6%

70+ 10.6% 6.1%

Tenure

Less than 2 years 3.4% 3.1%

2-5 years 6.0% 3.8%

6-10 years 7.2% 3.8%

 11-20 years 8.2% 4.0%

21+ years 8.9% 4.2%

Salary Quintile

Q1 Lowest Paid 5.0% 3.0%

Q2 Lower Paid 7.2% 3.7%

Q3 Mid-Range 7.0% 3.7%

Q4 Higher Paid 8.2% 4.1%

Q5 Highest Paid 9.1% 4.4%

10 | Page
Investment Allocation and Inactivity 

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

appropriately 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 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 a 

disproportionate percentage (43.6%) of their accounts in the 

G Fund, probably as a result of the default investment option 

being the G Fund. 

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

(as of 12/31/2013)

G Fund

F Fund

C Fund

S Fund

I Fund

Lifecycle Funds

We note that the shortest-tenured participants, those with less than two years of tenure, have 

the highest allocation to the G Fund, approximately 57%. Although we previously noted that the 

majority of automatically enrolled participants changed their contribution deferral rate, this 

concentration in the G Fund suggests that these participants are not “engaging” and shifting 

their investments away from the default allocation of the G Fund. Further, the lowest-paid 

participants have approximately 55% allocated to the G fund as compared to the highest paid 

who allocated only 27.5% to the G Fund. Females had a slightly higher allocation to the G Fund 

at 36.4% as compared to males at 32.8%. Additionally, blacks are allocated 43.3% to the G 

Fund, well above the allocation levels Asians at 32% and whites at 30%. See Table 4.

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

usage at 28.7% and 26.7% while the two oldest age cohorts had L Fund allocations of 12.7% 

and 8.4%. We also want to note that L Fund usage is highest among the 2-5 years tenure 

cohort (26.4%) and the 6-10 years group (24.9%). The majority of the participants in these two 

cohorts began Federal service after the implementation of the L Funds in 2005. Usage of the L 

Funds drops off somewhat with the less than two years cohort (19.4%), where the impact of 

auto-enrollment and inertia are likely factors. Males and females had nearly identical allocations 

to the L Funds at just under 17%. See Table 4.

The youngest participants 

who have the longest time 

horizon to reap the benefits 

of compounding returns 

have 43.6% of their assets 

invested in the G Fund.

11 | Page
Table 4

Annual Investment Allocations by Demographic Cohorts

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

Age

<= 29 43.6% 1.7% 10.4% 9.5% 6.1% 28.7%

30 – 39 29.1% 2.8% 19.0% 13.2% 9.1% 26.7%

40 – 49 27.1% 4.3% 30.9% 12.8% 7.5% 17.5%

50 – 59 35.9% 5.2% 27.5% 10.5% 5.6% 15.3%

60 – 69 43.7% 6.1% 24.0% 8.8% 4.7% 12.7%

70+ 48.4% 6.2% 24.8% 7.9% 4.2% 8.4%

Tenure

Less than 2 years 57.2% 2.3% 10.2% 6.9% 3.9% 19.4%

2-5 years 43.9% 3.0% 11.6% 9.6% 5.6% 26.4%

6-10 years 35.2% 3.4% 15.2% 12.7% 8.6% 24.9%

11-20 years 29.2% 5.3% 30.1% 12.3% 7.3% 15.8%

21+ years 35.5% 5.1% 29.7% 10.2% 5.3% 14.1%

Salary Quintile

Q1 Lowest Paid 54.5% 3.6% 16.8% 7.5% 4.9% 12.7%

Q2 Lower Paid 45.3% 5.0% 25.5% 8.3% 4.8% 11.0%

Q3 Mid-Range 40.3% 4.6% 23.0% 10.1% 6.0% 15.9%

Q4 Higher Paid 33.2% 4.5% 24.2% 12.1% 7.0% 19.0%

Q5 Highest Paid 27.5% 5.1% 30.7% 12.1% 6.7% 17.9%

Gender

Female 36.4% 5.3% 26.6% 9.4% 5.7% 16.6%

Male 32.8% 4.6% 27.2% 12.1% 6.7% 16.7%

Race and Ethnicity

American Indian or Native Alaskan 41.5% 4.4% 24.0% 10.2% 5.6% 14.3%

Asian or Other Pacific Islander 32.0% 4.7% 26.7% 13.4% 7.8% 15.5%

Black or African American 43.3% 4.7% 23.7% 9.5% 5.9% 12.9%

White 30.0% 4.8% 27.9% 11.6% 6.6% 19.1%

Hispanic Or Latino 36.1% 4.0% 24.3% 12.4% 7.3% 15.8%

Multi-Racial 33.6% 4.3% 22.0% 12.7% 7.5% 19.8%

Unknown 43.7% 5.3% 26.9% 8.7% 4.8% 10.5%

Education

Without High School Diploma 51.4% 4.0% 21.9% 7.8% 4.7% 10.3%

High School Diploma 41.1% 3.9% 21.6% 10.7% 6.5% 16.0%

Some College or Training 39.4% 4.3% 23.4% 11.0% 6.2% 15.8%

Bachelor's Degree 29.3% 4.6% 28.7% 12.3% 6.8% 18.3%

Post-Bachelor's Education/Degree 27.6% 5.4% 29.3% 11.6% 6.8% 19.4%

12 | Page
Of the participants utilizing the Lifecycle (L) Funds, the allocation is largely as we would hope. 

Those in the age 29 and under cohort were appropriately taking advantage of the L2040 and

L2050 Funds. Participants who would likely retire between 2025 and 2035 (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

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 – 6.6% for those age 29 and under and 7.4% 

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. In fact, the majority (59.7%) of the under age 29 cohort is invested solely in the G 

Fund. See Figure 8.

Figure 8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

Percent of Participants

FERS 100% Allocation in One Fund by Age

(as of 12/31/2013

100 % G Fund

100% F Fund

100% C Fund

100% S Fund

100% I Fund

100% In One L Fund

Other Allocations

13 | Page
Figure 9 below reports on the percentage of participants who have not engaged in any 

investment activity, i.e., they did not change how their contributions are invested or make a 

change to their existing investment allocation in 2013. As illustrated in the chart, the majority of 

participants do not actively manage their TSP accounts. While the level of inactivity did decline 

from 2012 to 2013, no age cohort had less than 80% inactive participants. When examining 

investment inactivity by other demographic filters, only the following cohorts had less than 80% 

inactive participants: highest paid (75.1%); tenured 21 or more years (76.6%), Asians (78.9%) 

and bachelor’s degree (79.6%).

Figure 9

65%

70%

75%

80%

85%

90%

95%

100%

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

Percent Inactive

FERS Investment Inactivity by Age

2009

2010

2011

2012

2013

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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 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 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 12% of the participants in each cohort receiving a loan in 2013. All age groups 

experienced an increase in loan usage in 2013. However, the increase was less than one-half of 

one percent for all age cohorts. See figure 10 for the percent of participants who received a loan 

issued during each year in the reporting period. 

Figure 10

Loan usage is fairly even among all salary quintiles, ranging from approximately 10% to 11% for 

four out of the five quintiles. The loan usage rate among the highest paid was at 7.8% in 2013. 

Males and females also had similar rates of loan usage with 10.0% of males and10.8% of 

females receiving loans in 2013. However, there is noticeable difference in loan usage among 

educational and racial/ethnic cohorts. Loan usage drops off with an increased level of 

education. Only 6.9% of participants with post-bachelor’s education received a loan in 2013 as 

compared to nearly double that amount among those without a high school diploma (13.6%). 

Figure 11 shows a similar disparity in loan usage among racial and ethnic cohorts with whites 

and Asians having significantly lower loan usage than other groups.

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Figure 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 more than 

4% of participants in this cohort receiving a hardship withdrawal during the first four years in this 

reporting period. In 2013, more than 5% of the age 40- 49 cohort received a hardship 

withdrawal. See figure 12. The three youngest cohorts experienced a slight increase in 

withdrawal usage in 2013 over the previous year.

Figure 12

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

usage generally declining as salary levels increase. See figure 13. 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. Second quintile had the highest 

usage rate at 6.2%. Among other cohorts, more females (5.0%) than males (3.2%) received 

hardship withdrawals in 2013, while blacks (8.1%) received more hardship withdrawals than 

other racial and ethnic cohorts.

Figure 13

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Summary

The analysis reveals an improvement in the FERS participation with a five-year high of 89.6% 

by the end of 2013. However, the contribution deferral rate dropped to 8.2% - the lowest rate in 

this reporting period. Automatic enrollment was a contributing factor to both of these 

observations. 

Automatic enrollment helped produce an 18% increase in participation among the shortesttenured participants. Participants with less than two-years of tenure now participate at a rate of 

98.3% - the highest rate of participation among all tenure bands. When examining participation 

through salary, gender, race/ethnicity, and education filters, virtually every cohort experienced 

an improved participation rate in 2013.

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

with 63.2% making deferral changes. Nevertheless, the only participant cohort that was hired 

entirely after the introduction of automatic enrollment in August 2010 has experienced a dip in 

deferral rates, down to 3.8% in 2013. This lowest tenured cohort is the only cohort not 

contributing at a level which results in receiving the full Agency match. While deferral rates 

continue to aggregate in the 5-6% range, with 30.4% of TSP contributors falling in this range, 

nearly 75% of FERS participants are estimated to be receiving the full match.

Participants aged 29 and under have a disproportionate percentage (43.6%) of their account 

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

(28.7%). We further note that L Fund usage is highest among the 2-5 year tenure cohort 

(26.4%) and the 6-10 years group (24.9%). The majority of these cohorts were hired after the 

implementation of the L Funds. Overall, participants are investing in the L Fund in a manner 

appropriate for their age cohort.

Loan usage rates are evenly distributed among salary quintiles and between males and 

females. However, noticeable differences were identified among educational and racial/ethnic 

cohorts. Among age cohorts, the 30-39 and 40-49 age cohorts have the highest loan usage 

rate at approximately 12% each. The age 40-49 cohort also had the highest hardship withdrawal 

usage, with more than 4% of participants in this cohort receiving a hardship withdrawal in each 

year of this reporting period. It was also found that Blacks utilize loans and hardship 

withdrawals significantly more than white and Asian participants.

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Appendix A

Summary of FERS Demographic Statistics

All FERS Fulltime 

2009 2010 2011 2012 2013

Participant Count 2,030,386 2,115,082 2,155,342 2,136,325 2,157,260 

Age 

<=29 2.0% 1.4% 0.9% 0.6% 0.4%

30-39 3.4% 2.8% 2.3% 2.1% 1.9%

40-49 5.2% 4.6% 4.1% 3.8% 3.5%

50-59 3.7% 3.5% 3.5% 3.6% 3.7%

60-69 0.9% 0.9% 1.0% 1.1% 1.1%

70+ 0.1% 0.1% 0.1% 0.1% 0.1%

Tenure 

< 2 years 3.5% 2.0% 0.8% 0.1% 0.1%

2-5 years 3.3% 3.2% 3.4% 3.0% 2.2%

6-10 years 2.7% 2.6% 2.4% 2.4% 2.5%

11-20 years 3.3% 3.1% 2.9% 3.1% 3.3%

21+ years 2.3% 2.4% 2.4% 2.6% 2.5%

Gender

Female 41.9% 41.9% 41.7% 41.7% 41.7%

Male 58.1% 58.1% 58.3% 58.3% 58.3%

Race and Ethnicity

American Indian or Native 

Alaskan 1.4% 1.4% 1.4% 1.4% 1.3%

Asian or Other Pacific Islander 4.6% 4.7% 4.8% 4.9% 5.0%

Black or African American 13.6% 13.9% 13.9% 14.0% 14.3%

White 51.5% 52.3% 52.4% 52.4% 52.5%

Hispanic Or Latino 6.3% 6.3% 6.4% 6.5% 6.6%

Multi-Racial 0.5% 0.7% 0.9% 1.0% 1.1%

Unknown 22.1% 20.7% 20.2% 19.8% 19.1%

Education

Without High School Diploma 0.5% 0.4% 0.4% 0.4% 0.4%

High School Diploma 21.3% 21.5% 21.4% 20.8% 20.6%

Some College or Training 19.2% 19.2% 19.1% 19.1% 19.0%

Bachelor's Degree 20.1% 20.9% 21.2% 21.4% 21.7%

Post-Bachelor's 

Education/Degree 16.0% 17.2% 17.8% 18.4% 19.2%

Unknown 22.8% 20.7% 20.1% 19.8% 19.1%

Average Age 49.6 48.6 47.9 47.4 46.7

Average Tenure 12.0 12.1 11.9 12.4 12.7

Average Salary $67,645 $70,065 $71,425 $72,472 $73,892

Average TSP Balance $68,435 $77,617 $81,924 $93,445 $109,631

19 | Page
Appendix B

Summary of FERS Demographic Statistics

FERS Fulltime Contributing 

2009 2010 2011 2012 2013

Participant Count 1,830,700 1,946,863 2,003,804 2,001,235 2,026,044 

Age 

<=29 8% 9% 8% 8% 7%

30-39 20% 20% 20% 20% 21%

40-49 34% 32% 31% 30% 29%

50-59 29% 30% 31% 32% 33%

60-69 8% 9% 9% 10% 10%

70+ 0% 0% 1% 1% 1%

Tenure 

< 2 years 10% 11% 12% 9% 9%

2-5 years 18% 19% 21% 22% 21%

6-10 years 20% 20% 20% 20% 20%

11-20 years 29% 26% 25% 25% 26%

21+ years 23% 24% 23% 24% 23%

Gender

Female 42.89% 42.90% 42.54% 42.56% 42.60%

Male 57.11% 57.10% 57.46% 57.43% 57.39%

Race and Ethnicity

American Indian or Native 

Alaskan 1% 1% 1% 1% 1%

Asian or Other Pacific Islander 5% 5% 5% 5% 5%

Black or African American 12% 12% 13% 13% 13%

White 52% 53% 54% 54% 54%

Hispanic Or Latino 6% 6% 6% 6% 7%

Multi-Racial 0% 1% 1% 1% 1%

Unknown 23% 21% 20% 19% 18%

Education

Without High School Diploma 0% 0% 0% 0% 0%

High School Diploma 20% 20% 20% 20% 20%

Some College or Training 18% 18% 19% 19% 19%

Bachelor's Degree 21% 22% 22% 22% 23%

Post-Bachelor's 

Education/Degree 17% 18% 19% 20% 21%

Unknown 24% 21% 20% 19% 18%

Average Age 49.6 48.7 47.9 47.4 46.6

Average Tenure 12.3 12.1 11.8 12.2 12.4

Average Salary $69,986 $72,107 $73,143 $74,055 $75,374

Average TSP Balance $79,653 $88,299 $91,012 $102,937 $120,163

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Appendix C

Summary of FERS Demographic Statistics

FERS Fulltime Non-contributing 

2009 2010 2011 2012 2013

Participant Count 354,728 323,529 279,948 259,894 249,699

Age 

<=29 14.6% 12.1% 8.1% 5.8% 4.5%

30-39 22.4% 21.6% 20.0% 18.7% 18.3%

40-49 32.7% 33.0% 33.9% 33.3% 32.2%

50-59 23.5% 25.5% 29.0% 31.8% 33.6%

60-69 6.3% 7.2% 8.3% 9.6% 10.5%

70+ 0.5% 0.6% 0.7% 0.8% 0.9%

Tenure 

< 2 years 25.2% 16.6% 6.9% 1.4% 1.4%

2-5 years 23.6% 26.8% 30.4% 28.1% 21.9%

6-10 years 17.5% 18.9% 19.9% 22.1% 24.2%

11-20 years 20.3% 21.8% 23.9% 26.8% 30.2%

21+ years 13.3% 15.9% 19.0% 21.6% 22.3%

Gender

Female 44.5% 44.3% 43.3% 43.4% 43.6%

Male 55.5% 55.7% 56.7% 56.6% 56.4%

Race and Ethnicity

American Indian or Native Alaskan 2.2% 2.0% 2.0% 2.0% 2.0%

Asian or Other Pacific Islander 3.1% 2.9% 2.7% 2.5% 2.5%

Black or African American 20.5% 20.7% 20.7% 21.3% 21.9%

White 44.1% 42.9% 40.3% 38.6% 38.4%

Hispanic Or Latino 6.8% 6.9% 6.6% 6.5% 6.8%

Multi-Racial 0.8% 0.9% 0.9% 0.9% 1.0%

Unknown 22.5% 23.6% 26.8% 28.3% 27.4%

Education

Without High School Diploma 0.9% 0.8% 0.8% 0.8% 0.8%

High School Diploma 31.4% 32.1% 30.5% 29.2% 29.8%

Some College or Training 22.1% 22.1% 21.6% 21.5% 21.6%

Bachelor's Degree 12.2% 12.4% 12.0% 11.8% 12.0%

Post-Bachelor's Education/Degree 8.9% 8.8% 8.4% 8.3% 8.3%

Unknown 24.5% 23.8% 26.8% 28.3% 27.4%

Average Age 47.5 47.4 47.8 47.9 47.5

Average Tenure 8.5 9.6 10.8 12.2 13.0

Average Salary $53,996 $56,461 $59,248 $60,574 $61,394

Average TSP Balance $10,538 $13,333 $16,877 $20,355 $24,182

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Appendix D

FERS Salary Quintiles

Year Count 

Salary

Number of 

Participants

Quintile 1 

Lowest Paid

Quintile 2 

Lower Paid

Quintile 3 

Mid-Range

Quintile 4 

Higher Paid

Quintile 5 

Highest Paid

Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top

2013 Count 2,150,861 1 430,172 430,173 860,344 860,345 1,290,516 1,290,517 1,720,688 1,720,689 2,150,560

Salary $10,000 $50,611 $50,611 $57,219 $57,219 $73,420 $73,420 $97,701 $97,701 $230,700 

2012 Count 2,130,944 1 426,189 426,190 852,378 852,378 1,278,567 1,278,568 1,704,756 1,704,757 2,130,944

Salary $10,000 $48,775 $49,775 $56,508 $56,508 $71,201 $71,201 $95,459 $95,459 $230,700 

2011 Count 2,150,461 1 430,093 430,094 860,185 860,186 1,290,277 1,290,278 1,720,369 1,720,370 2,150,461

Salary $10,000 $49,075 $49,075 $56,508 $56,508 $70,062 $70,062 $94,551 $94,551 $230,700 

2010 Count 2,110,401 1 422,081 422,082 844,161 844,162 1,266,241 1,266,242 1,688,321 1,688,322 2,110,400

Salary $10,000 $47,900 $47,900 $55,530 $55,530 $67,762 $67,762 $92,431 $92,431 $230,700 

2009 Count 2,026,503 1 405,301 405,302 810,602 810,603 1,215,903 1,215,904 1,621,203 1,621,204 2,026,503

Salary $10,000 $46,625 $46,625 $54,122 $54,122 $63,930 $63,930 $88,699 $88,699 $227,300 

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