Thrift Savings Plan

Participant Behavior

and Demographics

Analysis of 2012 – 2016
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 

2016 data is similar to analysis of data conducted in previous years, except that additional 

indicative data from the Office of Personnel Management (OPM) used in previous years was not 

available this year.

As with the 2014 report, the 2016 analysis will focus solely on participants in FERS, the Federal 

Employee Retirement System. The participant population in the Civil Service Retirement 

System (CSRS) is a very small and declining segment of the TSP, and the Uniformed Services 

participation will be included after the introduction of the Blended Retirement System in 2018.

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.

As OPM data was not available, the demographics data presented in this report is not as 

comprehensive as used in previous reports. In order to estimate an individual’s salary for FERS 

employees, the 1% automatic contributions were used. This value is then used to calculate 

salary quintiles and the average deferral rate. As a result, there are small variances when 

compared to previous reports. The salary reported in previously included all salary reported to 

OPM, including overtime and performance awards. 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.

This method also allows us to include participants from the Judicial and Legislative branch 

which had historically not been included, as OPM does not maintain records on those 

individuals. In addition, participants who work part-time or intermittently are included in the 

analysis as information on participant work schedules is not available in the TSP data extract.

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 previous years, 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 previous reports.

The inclusion 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, 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 or OPM 

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, 2016 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 was at an all-time high of 91.9% by the end of 2016. 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 age-appropriate 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 has shrunk dramatically, from a 13% difference in 2012 to 7% in 2016. See 

Table 1 below:

89.0%

89.6% 89.9%

91.1%

91.9%

2012 2013 2014 2015 2016

Annual FERS Participation Rates
5

Table 1

Annual FERS Participation Rates by Demographic Cohorts

2012 2013 2014 2015 2016

Age

<= 29 91.7% 93.3% 94.6% 95.6% 96.8%

30 – 39 89.5% 90.5% 91.3% 93.0% 94.2%

40 – 49 87.6% 88.0% 88.4% 90.2% 91.3%

50 – 59 88.7% 88.9% 89.0% 90.2% 90.8%

60 – 69 89.1% 89.1% 89.1% 89.9% 90.2%

70+ 87.5% 87.8% 87.2% 87.1% 86.9%

Salary Quintile

Q1 Lowest Paid 82.7% 84.3% 85.8% 89.8% 89.1%

Q2 Lower Paid 83.6% 83.8% 84.2% 86.7% 87.7%

Q3 Mid-Range 89.0% 89.4% 89.1% 89.2% 90.2%

Q4 Higher Paid 92.8% 93.1% 93.3% 93.8% 94.4%

Q5 Highest Paid 95.6% 95.7% 95.8% 96.3% 96.6%

Auto enrollment has resulted in increased participation rates, with less than 4% of auto enrolled 

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

demonstrated a degree of engagement with the TSP as 59.4% have actively made deferral

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

in figure 2, the 40% 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 7.8% in 2016 as shown in figure 3. While the FERS deferral rate exceeds the 5.9% 

average deferral rate (ADP)1 of 

other defined contribution plans, 

it is significantly lower than the 

9.5% FERS deferral rates of the 

mid-2000s.

This drop is a side effect of 

automatic enrollment. Automatic 

enrollment brings many new 

participants into the Plan who 

would not otherwise have been 

participating. However, many, if 

not most of these auto-enrolled 

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 29.5% of TSP contributors being in this range in 2016. 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 

consistently grown over the last 5 years. Still of significant note, however, 31.9% of participants 

are not receiving the full matching contribution as they are contributing less than 5%.

 

1

“For [Non-highly compensated employees], the median ADP was 5.9% . . ., while the median ADP for [highly 

compensated employees was 7.0%. . . .” Deloitte, Annual Defined Contribution Benchmarking Survey – Ease of 

Use Drives Engagement in Saving for Retirement, 2015 Edition

Figure 3
7

Figure 4

The lowest-paid participants are deferring the least – 4.3% less than the highest paid. See table 

2. However, with an average deferral rate of 5.5%, 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

2012 2013 2014 2015 2016

Age

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

30 – 39 6.3% 6.1% 6.1% 6.4% 6.4%

40 – 49 7.4% 7.1% 7.2% 7.2% 7.2%

50 – 59 9.2% 9.0% 9.0% 9.2% 9.1%

60 – 69 10.5% 10.3% 10.2% 10.5% 10.0%

70+ 11.9% 11.6% 11.4% 11.6% 10.8%

Salary Quintile

Q1 Lowest Paid 5.4% 5.1% 5.1% 5.7% 5.5%

Q2 Lower Paid 7.5% 7.4% 7.4% 7.0% 7.2%

Q3 Mid-Range 7.5% 7.3% 7.5% 8.0% 8.1%

Q4 Higher Paid 8.8% 8.6% 8.7% 8.8% 8.9%

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

0%

5%

10%

15%

20%

25%

30%

35%

2012 2013 2014 2015 2016

Participants

Distribution of FERS Deferral Rates

0 - 2%

3 - 4%

5 - 6%

7 - 8%

9 - 10%

11 - 12%

13 - 14%

15%

> 15%
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 4.9% as opposed to the average traditional deferral of 7.2%.

(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 2016. 

Table 3

FERS Traditional and Roth Deferral Rates 

by Demographic Cohorts

2014 2015 2016

Traditional Roth Traditional Roth Traditional Roth

Age

<= 29 4.5% 3.9% 4.7% 4.8% 4.6% 4.9%

30 – 39 5.8% 3.9% 6.0% 4.6% 5.9% 4.7%

40 – 49 6.9% 3.9% 6.9% 4.4% 6.8% 4.5%

50 – 59 8.4% 4.7% 8.5% 5.1% 8.3% 5.2%

60 – 69 9.4% 6.0% 9.6% 6.7% 9.1% 6.4%

70+ 10.4% 6.8% 10.6% 8.3% 9.8% 7.6%

Salary Quintile

Q1 Lowest Paid 4.8% 3.4% 5.3% 4.5% 5.1% 4.4%

Q2 Lower Paid 7.1% 4.1% 6.6% 4.6% 6.7% 4.6%

Q3 Mid-Range 7.2% 4.3% 7.6% 4.9% 7.6% 5.1%

Q4 Higher Paid 8.3% 4.5% 8.3% 5.1% 8.3% 5.2%

Q5 Highest Paid 9.1% 4.8% 9.1% 5.1% 9.0% 5.2%

7.3% 7.3% 7.4% 7.3%

3.8% 4.2% 4.8% 4.9%

2013 2014 2015 2016

FERS Deferral Rates by Contribution Type

Traditional

Roth
9

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 40.7% 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 slight improvement from 2014 when the 

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

Figure 6

The lowest-paid participants have approximately 50.9% allocated to the G fund as compared to 

the highest paid who allocated only 25.4% to the G Fund. See Table 4.

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

usage at 32.8% and 31.8% while the two oldest age cohorts had L Fund allocations of 14.9% 

and 9.6%. When compared to 2014, the biggest increases were in the L fund allocations for 

those under 50. This is most likely influenced by the default investment changing from the G 

Fund to an age appropriate L Fund in 2015. See Table 4.

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 40.7% of 

their assets invested in 

the G Fund.
10

Table 4

2016 Investment Allocations by Demographic Cohorts

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

Age

<= 29 40.7% 1.3% 13.0% 8.9% 3.4% 32.8%

30 – 39 28.4% 2.3% 18.3% 12.8% 6.3% 31.8%

40 – 49 25.1% 3.7% 31.1% 13.2% 5.8% 21.1%

50 – 59 33.8% 4.7% 30.1% 10.2% 4.0% 17.1%

60 – 69 43.2% 5.6% 25.2% 8.0% 3.2% 14.9%

70+ 48.0% 5.9% 26.0% 7.6% 2.8% 9.6%

Salary Quintile

Q1 Lowest Paid 50.9% 3.4% 19.2% 7.7% 3.5% 15.3%

Q2 Lower Paid 44.0% 4.5% 26.8% 8.1% 3.5% 13.0%

Q3 Mid-Range 36.3% 4.1% 24.4% 10.6% 4.5% 20.1%

Q4 Higher Paid 30.6% 4.3% 26.6% 12.0% 4.9% 21.7%

Q5 Highest Paid 25.4% 4.7% 33.2% 11.9% 4.9% 19.9%

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 of the L2040 and L2050 Funds.

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

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 – 46.1% for those age 29 and under and 

22.1% 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 

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
11

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,

and the minimum loan amount is $1,000.

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

over 10% of the participants in these cohorts receiving a loan in 2016. These rates were 

essentially unchanged from 2015.

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%

2012 2013 2014 2015 2016

Percent with Loan

FERS Loan Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70+
12

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 4% to 5% 

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

report. All cohorts have experienced a slow decrease in hardship withdrawal usage since 2013.

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 2016, the second salary quintile 

had the highest usage rate at 4.7%, which is 1.5% percent drop from the peak in 2013.

Figure 11

0%

1%

2%

3%

4%

5%

6%

2012 2013 2014 2015 2016

FERS Hardship Withdrawal Usage 

by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70 +

0%

2%

4%

6%

8%

2012 2013 2014 2015 2016

FERS Hardship Withdrawal Usage 

by Salary Quintile

Q1 Lowest Paid

Q2 Lower Paid

Q3 Mid Range

Q4 Higher Paid

Q5 Highest Paid
13

Summary

The analysis reveals an improvement in the FERS participation with a five-year high of 91.9% 

by the end of 2016. However, the average contribution deferral rate dropped to 7.8% - the 

lowest rate in this reporting period. Automatic enrollment was a contributing factor to both of 

these observations.

Automatic enrollment continues to improve participation among the youngest participants.

Participants under the age of 29 now participate at a rate of 96.8% – the highest rate of 

participation among all age groups. Consistent increases were also present when the 

participation rate was viewed from a salary quintile perspective. The only cohort that did not 

show an increase was the 70 and over age group, but given their proximity to retirement, this is 

not unexpected.

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

59.4% making deferral changes. Deferral behavior appears to be relatively unchanged, as 

deferral rates continue to aggregate in the 5-6% range, with 29.5% of TSP contributors falling in 

this range, nearly 70% of FERS participants are estimated to be receiving the full match.

Participants are gradually increasing their contributions to Roth TSP with average Roth deferral 

rates growing by a half percent to 4.9% in 2016.

Participants aged 29 and under continue to have a disproportionate percentage (40.7%) of their 

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

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

Funds (32.8%). Overall, participants are investing in the L Fund in a manner appropriate for 

their age cohort.

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 although loan usage trended downward among all 

age cohorts since 2012. The age 40-49 cohort also had the highest hardship withdrawal usage, 

with 3% to 4% of participants in this cohort receiving a hardship withdrawal in each year of this 

reporting period. From a salary perspective, participants in the second and third quintile have 

the highest rates of usage of hardship withdrawals. Overall, however, loan and hardship 

withdrawals usage trends have been decreasing in the under age 60 groups, but remained flat 

for those 60 and over.