Thrift Savings Plan

Participant Behavior

and Demographics (FERS)

 Analysis of 2016 – 2020

APPENDIX C
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 

2020 data is similar to analysis of data conducted in the previous year.

As with the 2019 report, the 2020 review 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 ten Lifecycle Funds (L 

Funds); TSP added six additional funds on July 1, 2020 and retired the L 2020 Fund. The L 

Funds are custom target-date funds, provided in five-year intervals, 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: 

in January 2018, the Blended Retirement System (BRS) was implemented; on October 1, 2020, 

TSP raised the default deferral rate to 5% from 3%; and the Additional Withdrawals Project 

(AWP) launched September 15, 2019 providing increased withdrawal flexibilities and removed 

the 6-month hardship contribution suspension. Note: Discussion of BRS is out of scope for this 

report. 
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 2019 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. The effect is that the average deferral rate (calculated using a smaller 

denominator) will be higher using this methodology and 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 have 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 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 full-time 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, 2020 and through the lens of two demographic filters – 

age and salary. The analysis focuses on 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 94.6% at the end of 

2020, a 0.8 percentage point increase over 2019 participation levels. This is partly due to the 

removal of the 6-month hardship contribution suspension on September 15, 2019. Figure 1 

illustrates the steady improvement in the participation rate over the last 5 years continuing the 

trend since the implementation of automatic enrollment for new hires in 2010. Automatic 

enrollment allows new employees to automatically have 5%1 of their salary deferred into the 

TSP and receive full agency matching unless the employee makes an active election to reduce 

their participation or chose not to participate in the Plan. 

Figure 1

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

and lowest-paid. In contrast to the trend prior to auto-enrollment, 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. 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 7.5 percentage point difference in 2016 versus 3.6 percentage 

points in 2020. See Table 1 below:

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

91.9% 92.6% 93.3% 93.8% 94.6%

2016 2017 2018 2019 2020

Annual FERS Participation Rates
5

Table 1

Annual FERS Participation Rates by Demographic Cohorts

2016 2017 2018 2019 2020

Age

<= 29 96.8% 96.5% 97.1% 97.0% 97.3%

30 – 39 94.2% 94.6% 95.3% 95.7% 96.2%

40 – 49 91.3% 92.1% 92.9% 93.6% 94.6%

50 – 59 90.8% 91.5% 92.2% 92.7% 93.5%

60 – 69 90.2% 90.8% 91.4% 91.9% 92.6%

70+ 86.9% 87.7% 87.6% 88.2% 88.6%

Salary Quintile

Q1 Lowest Paid 89.1% 91.5% 92.5% 92.9% 93.8%

Q2 Lower Paid 87.7% 89.1% 90.1% 91.1% 92.2%

Q3 Mid-Range 90.2% 90.8% 91.3% 91.7% 92.9%

Q4 Higher Paid 94.4% 94.7% 94.9% 95.2% 95.7%

Q5 Highest Paid 96.6% 96.7% 96.9% 97.0% 97.4%

Auto-enrollment has resulted in continued increase in participation rates since implementation in 

2010, with approximately 1.7% of auto-enrolled (AE) participants opting out of making 

contributions. In addition, auto-enrolled participants have demonstrated a relatively high degree 

of engagement with the TSP as 81% have actively made deferral changes, interfund transfers

or other transactions since entering the Plan. However, as shown in figure 2, the portion of 

those who have made no change since being auto-enrolled decreased as salary increased from 

35% in the lowest quintile to 6% in the highest quintile of salary. 

Figure 2 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

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 / No Activity AE / Subsequent Activity AE / Deferral Change
6

Deferral Rates

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

previously leveled around 7.9%; however, it has jumped to 8.1% in 2020 as shown in figure 3. 

The FERS deferral rate exceeds the 7.1% average deferral rate (ADP) of other defined 

contribution plans according to Deloitte2

and the 7.0% ADP for automatic plans 

according to Vanguard3. However, it is still 

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 auto-enrolled participants have continued to contribute at the 3% or 

5% default level4. The increase in new participants at the default level caused the average 

deferral rate to slowly decline and now level off. 

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. As expected, deferral rates 

aggregate in the 5-6% range for participants to receive the full employer match, with 31.6% of 

TSP contributors being in this range in 2020. 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, 26.5% of participants are not receiving the full matching contribution as they are

contributing less than 5%; however, this continues to decline. The percent of participants not 

receiving full matching contributions is expected to decrease more rapidly due to increasing the 

default level from 3% to 5% for all new auto-enrolled participants on October 1, 2020. 

Figure 4

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 7.0% in 2019.” Vanguard, How America Saves 2020.

4 Participants auto-enrolled on or after October 1, 2020 have been enrolled at the new 5% default deferral. 

Participants enrolled prior to October 1st were auto-enrolled at 3%.

0%

5%

10%

15%

20%

25%

30%

35%

2016 2017 2018 2019 2020

Participants

Distribution of FERS Deferral Rates

0 - 2%

3 - 4%

5 - 6%

7 - 8%

9 - 10%

11 - 12%

13 - 14%

15%

> 15%

Figure 3

7.8% 7.9% 7.9% 7.9% 8.1%

2016 2017 2018 2019 2020

FERS Deferral Rates 
7

The lowest-paid participants are deferring the least, but with an average deferral rate of 6.1%, 

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 age. Deferral rates for all 

ages, and all but the lowest paid participants increased in 2020.

Table 2

Annual FERS Deferral Rates by Demographic Cohorts

2016 2017 2018 2019 2020

Age

<= 29 5.3% 5.2% 5.4% 5.5% 5.8%

30 – 39 6.4% 6.4% 6.6% 6.6% 6.8%

40 – 49 7.2% 7.2% 7.3% 7.3% 7.6%

50 – 59 9.1% 9.1% 9.1% 9.1% 9.3%

60 – 69 10.0% 10.3% 10.0% 10.0% 10.2%

70+ 10.8% 11.1% 10.5% 10.4% 10.5%

Salary Quintile

Q1 Lowest Paid 5.5% 5.7% 5.9% 6.6% 6.1%

Q2 Lower Paid 7.2% 7.0% 6.9% 6.8% 7.0%

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

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

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

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

dollars, and 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 5.7% as opposed to the average traditional deferral of 7.4%. While 

the traditional deferral is holding steady, 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 

7.3% 7.5% 7.4% 7.3% 7.4%

4.9% 5.0% 5.2% 5.3% 5.7%

2016 2017 2018 2019 2020

FERS Deferral Rates by Contribution Type

Traditional

Roth
8

Roth deferral rates are highest among both the oldest and the highest-paid participants. 

However, all demographic cohorts experienced an increase in Roth deferrals in 2020. 

Table 3 

FERS Traditional and Roth Deferral Rates 

by Demographic Cohorts

2018 2019 2020

Traditional Roth Traditional Roth Traditional Roth

Age

<= 29 4.6% 5.1% 4.5% 5.3% 4.7% 5.7%

30 – 39 5.9% 5.1% 5.9% 5.2% 6.0% 5.6%

40 – 49 6.8% 4.7% 6.8% 4.9% 6.9% 5.2%

50 – 59 8.6% 5.4% 8.6% 5.5% 8.6% 5.9%

60 – 69 9.5% 6.4% 9.4% 6.5% 9.5% 6.9%

70+ 10.2% 7.4% 10.0% 7.8% 10.0% 8.2%

Salary Quintile

Q1 Lowest 

Paid 5.3% 4.8% 6.0% 5.0% 5.5% 5.2%

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

Q3 Mid-Range 7.5% 5.3% 7.5% 5.5% 7.6% 5.9%

Q4 Higher Paid 8.5% 5.6% 8.4% 5.8% 8.5% 6.1%

Q5 Highest 

Paid 9.4% 5.4% 9.4% 5.7% 9.4% 6.0%
9

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. 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.

Figure 6 shows older participants have higher allocations to the G Fund than younger 

participants. 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.

Figure 6

As noted in Table 4, the lowest-paid participants have approximately 35.6% allocated to the G 

fund as compared to the highest paid who allocated only 22.6% to the G Fund. Though the 

lower-paid continue to decrease, the percent of assets allocated to the G Fund increased 

compared to 2019 for the highest-paid. 

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

62.6%, which continues to increase each year. The oldest cohort has the lowest level of L Fund 

usage at 12.6%, however, this has also increased slightly each year. When compared to 2019, 

allocations for the C and S funds increased for all cohorts except for the youngest cohort’s 

allocation to the S fund which dropped slightly. This is likely due to better market returns in 

2020 compared to 2019 and the corresponding decrease in G Fund allocations. Increases in L 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

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 9% of their 

assets invested in the G 

Fund, a continual and 

significant decline from 

previous years.
10

Fund utilization is likely influenced by the default investment changing from the G Fund to an 

age-appropriate L Fund in 2015 and the impact of ongoing communications regarding the 

benefits of utilizing the L Funds.

Table 4

2020 Investment Allocations by Demographic Cohorts

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

Age

<= 29 9.0% 0.6% 16.7% 8.8% 2.4% 62.6%

30 – 39 18.0% 1.6% 22.2% 14.3% 4.7% 39.2%

40 – 49 19.9% 2.8% 29.2% 15.5% 5.4% 27.2%

50 – 59 28.4% 4.4% 32.1% 11.5% 3.9% 19.8%

60 – 69 37.8% 5.3% 27.5% 9.0% 3.1% 17.3%

70+ 43.1% 5.4% 27.9% 8.2% 2.8% 12.6%

Salary Quintile

Q1 Lowest Paid 35.6% 2.5% 20.0% 9.0% 3.0% 30.0%

Q2 Lower Paid 37.2% 3.7% 28.9% 10.1% 3.2% 17.0%

Q3 Mid-Range 28.9% 3.3% 26.4% 12.6% 4.1% 24.8%

Q4 Higher Paid 25.3% 3.7% 28.5% 13.8% 4.4% 24.3%

Q5 Highest Paid 22.6% 4.5% 33.2% 12.5% 4.6% 22.7%

In July 2020, TSP launched 6 additional L Funds and retired the L 2020 Fund. These new L 

Funds added 5-year L Funds up to the L 2065 Fund and added the L 2060 Fund. Prior to July 

2020, the TSP has 5 L Funds in 10 year increments. The L 2020 Fund, having reached its 

termination point, merged with the L Income 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 to the new L 2055, L 2060 and L 

2065 Funds; however, new participants under 30 were auto-enrolled into these new funds.

Participants who would likely retire between 2034 and 2044 (the 40-49 age group) were in the 

L2040 Fund. The age 50-59 cohort was aggregated in the L2030 Fund. Participants aged 60-69 

invested in the L2020 Fund were rolled into the L Income Fund, where 47% have allocated their 

assets. Those 70 and over were split between the L 2020 and the L Income Fund in 2019, but in 

the current year, 65% of their assets are in the L Income Fund. See Figure 7. 
11

Figure 7

As shown in Figure 8, the use of one L Fund is most common with the two youngest age 

cohorts – 73.7% for those age 29 and under and 42.7% 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. 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 influenced by the change 

to an age-appropriate L fund as the default investment in 2015. 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 Allocated

FERS L Fund Investment Allocation By Age

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

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
12

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. With the CARES Act, loan amounts 

were temporarily increased to $100,000 for those affected by COVID-19 through December 31. 

2020.

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; the 

minimum withdrawal amount is $1,000 and includes a 10% early withdrawal penalty if the 

participant is younger than 59 1⁄2. 

Figure 9

Loan usage overall remained 

somewhat steady in previous years

around 8.7% but declined 1.5

percentage points in 2020 to 7.2%.

Even with the pandemic altering the 

U.S. economy, fewer participants 

took loans.

Hardship withdrawals slightly 

increased in 2019 but has dropped 

to a new low of 3% in 2020.

As seen in Figure 10, loan usage 

significantly dropped among all age 

groups. However, usage remains the highest among the 40-49 age cohort, with 8.9% of the 

participants in this cohort receiving a loan in 2020. Differing from prior years, usage among 

participants aged 50-59 was higher than those aged 30-39, 7.6% and 7.5% respectively. Loan 

utilization among the oldest and youngest cohorts dropped nearly a percentage point from 2019 

levels.

Figure 10

0%

2%

4%

6%

8%

10%

12%

2016 2017 2018 2019 2020*

Percent with Loan

FERS Loan Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70+

*Includes CARES 

8.7% 8.8% 8.6% 8.8%

7.2%

3.2% 3.5% 3.3% 3.8% 3.0%

0.0%

5.0%

10.0%

2016 2017 2018 2019 2020

FERS Loan and Hardship 

Withdrawal Usage

Loans Usage* Hardship Withdrawals

*Includes CARES Loans
13

Hardship withdrawal usage is also consistently highest among the age 40-49 cohort: 3.7%; 

however, the 50-59 cohort usage is only 0.1 percentage points lower. All cohorts saw a 

decrease in hardship withdrawals with the youngest cohort experiencing the smallest drop of 

only 0.2 percentage points.

Figure 11

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 is lower than loan usage among all salary quintiles. In 2020, the second salary quintile 

had the highest usage rate at 4.6%, which is 1.1% percent drop from 2019 levels and a 2% drop 

from the peak in 2013. Hardship withdrawal usage in 2020 is lower for all salary groups than in 

2019.

Figure 12

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2016 2017 2018 2019 2020

FERS Hardship Withdrawal Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70 +

0%

1%

2%

3%

4%

5%

6%

7%

2016 2017 2018 2019 2020

FERS Hardship Withdrawal Usage by Salary 

Quintile

Q1 Lowest Paid

Q2 Lower Paid

Q3 Mid Range

Q4 Higher Paid

Q5 Highest Paid
14

Summary

The analysis reveals that the TSP, through calendar year 2020, did not experience many 

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

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, while loans and hardship withdrawals experienced a

decline from 2019 levels. Deferral rates have increased slightly and 81% of auto-enrolled 

participants are making changes to their default enrollment. The TSP implemented a change to 

the default deferral rate from the 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.