Participant Behavior

and Demographics

Analysis of 2008 – 2012

Thrift Savings Plan
1

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 information from the Office of Personnel 

Management (OPM) database of Executive Branch and Postal Service employees. The analysis of calendar year 

2012 data is similar to analysis of data conducted in previous years. The last report was issued in 2007 and 

covered plan years 2000 through 2005.

Unlike previous reports, the 2012 analysis will focus solely on participants in FERS, the Federal Employee 

Retirement System, as the participant population in the Civil Service Retirement System 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 this report period, 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 first two plan design changes will be discussed 

later in this analysis. However, the report will not delve into participant behaviors associated with Roth 

contributions as there was not sufficient experience with Roth during this report period. Later versions of this 

report will include an examination of participant behaviors related to Roth contributions.

Data Collection and Methodology

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

information from the Office of Personnel Management (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, and employment (full-time vs. parttime) status. 
2

Not all records for participants on the TSP extract can be matched with OPM data. In 2012, a total of nearly 

2.7 million participants were identified by the TSP, and OPM returned data on approximately 2.3 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 are 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. Finally, approximately 102,000 part-time or intermittent employees 

are identified in the data; 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. 

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

lowest annual salary; the fifth quintile represents the 20% of records showing the highest paid participants. 

Data, with respect to the dollar-denominated salary ranges for the quintiles in each year, can be found in the 

Appendix.

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; and 

•	 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 five-year timeframe 

ending December 31, 2012, and through the lens of three demographic filters: age, tenure, and salary. The 

exhibits and narratives display the relationships between these demographic factors and these participant 

behaviors: 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 88.6% by the end of 2012. Figure 1 highlights three factors that 

influenced FERS participation rates during the five-year period of this report. In 2009, the participation rate 

experienced a decline of nearly 3% to 84.7% as rates dipped in conjunction with the economic downturn in 

2008.
3

FERS Participation RatesAge

Another factor contributing to the participation decline was 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. 

However, the decline in participation was mostly reversed with an almost 2% gain in overall participation 

in 2010 — the same year that automatic enrollment was instituted. 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. Along with strengthening in the market, automatic enrollment has been a contributor to the 

rebound in participation rates.

When examining participation by tenure bands, the impact of immediate contributions and automatic 

enrollment become even more evident. The economic downturn translated to a participation dip among all 

tenure bands in 2009. However, the decline among those with less than two years of tenure was nearly 12% as 

compared to the 1%–3% drop among the other tenure bands (see Figure 2 below).

FERS Participation Rates By Tenure

Participation Rate

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012

Less Than 2

2–5 Years

6–10 Years

11–20 Years

21 Plus Years

80%

84%

88%

92%

96%

100%

2008 2009 2010 2011 2012

Figure 1

Figure 2

Participation Rate
4

Historically, participation has been lowest among the newest employees — those with two or less years of 

employment — with rates of participation gradually increased as the length of tenure increased. However, with 

the introduction of automatic enrollment in August 2010, this trend has strongly shifted and now the shortesttenured employees have the highest participation rates. As shown in Figure 2, participation among the shortesttenured was the lowest at 81.5% in 2008 while the longest-tenured participated at a rate of 90.8%. By 2012, 

those with less than two-years of tenure participated at a rate of 97.9% — the highest rate of participation 

among all tenure bands. 

It appears that automatic enrollment may have had a similar but not as strong an impact on the youngest 

and lowest-paid participants as it did on the shortest-tenured participants. In 2008, the participation rate for 

the under age 29 cohort was the lowest among all age cohorts at 84.3%, while the age 60–69 cohort had the 

highest participation at 89.8%. By 2012, the youngest cohort had surpassed all other age cohorts and had 

the highest rate of participation at 90.6%. Between 2008 and 2010, participation rates among the lowestpaid quintile trailed that of the highest paid by approximately 20%. By 2012, the difference between the two 

quintiles was reduced to less than 15% (see Table 1 below).

Annual FERS Participation Rates by Age, 

Tenure, and Salary Quintile

2008 2009 2010 2011 2012

Age

< = 29

30–39

84.3%

86.4%

78.0%

83.3%

83.9%

85.7%

89.1%

88.2%

90.6%

89.0%

40–49

50–59

87.5%

88.8%

84.9%

87.1%

86.1%

88.0%

87.1%

88.5%

87.3%

88.5%

60–69

70+

89.8%

87.6%

88.4%

86.6%

89.0%

87.1%

89.1%

87.3%

89.0%

87.4%

Tenure

Less than 2 years

2–5 years

81.5%

84.5%

70.0%

81.9%

82.1%

83.3%

92.6%

84.2%

97.9%

86.5%

6–10 years 86.9% 85.9% 86.8% 88.0% 87.8%

11–20 years

21 + years

89.3%

90.8%

88.1%

90.0%

88.0%

89.9%

88.2%

89.7%

87.8%

89.6%

Salary Quintile

Q1 Lowest Paid

Q2 Lower Paid

77.0%

84.4%

71.1%

82.3%

76.2%

83.4%

80.6%

83.8%

81.0%

83.4%

Q3 Mid-Range 88.4% 86.5% 87.3% 88.3% 89.0%

Q4 Higher Paid

Q5 Highest Paid

92.2%

95.9%

89.9%

94.4%

91.3%

95.1%

92.4%

95.4%

92.8%

95.6%

Table 1
5

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 auto-enrolled participants are remaining in the Plan and 

of this population, 68% are actively making deferral changes, while another portion are showing signs of life 

with other activity, such as interfund transfers. 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.

FERS Automatic Enrollment Status by Salary Quintile

(as of 12/31/2012)Age

Contribution Deferral Rates

The FERS contribution deferral rate rose to 8.5% in 2012 after experiencing a downward trend in 2009 and 

2010 as shown in Figure 4. While the decline may be attributed to the economic downturn, at least a portion 

is likely the result of auto-enrolled participants remaining at the default deferral rate of 3%. While the deferral 

rate has not returned to 2008 levels, it has been strengthening since the 2010 low point.

Figure 4 FERS Deferral Rates

Figure 3Percent of Participants

Deferral Rate

7.6%

8.0%

8.4%

8.8%

9.2%

9.6%

10.0%

2008 2009 2010 2011 2012

Auto-Enrolled

AE/Subsequent Activity

AE/Deferral Change

0%

20%

40%

60%

80%

100%

Q1 Lowest Paid Q2 Lower Paid Q3 Mid-Range Q4 Higher Paid Q5 Highest Paid
6

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 31.5% of 

TSP contributors being in this range in 2012. Of significant note, 22% of participants are not receiving the full 

matching contribution as they are contributing less than 5%. 

Distribution of FERS Deferral Rates

Age

As expected, the lowest-paid participants are deferring the least — approximately 4% less than the highest paid. 

However, Table 2 below also shows that deferral rates for the two lowest-paid quintiles have demonstrated 

some strengthening in the last two years. These are the only two salary quintiles that are at or above their 2008 

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

Yet, both of these participant cohorts have rates above their 2008 deferral rates unlike the other age and tenure 

cohorts. The 2012 deferral rate of 5.2% for participants with less than two years of tenure is nearly one percent 

above the 2008 rate and marks that for the first time in five years, the average participant in the 2 year of less 

tenure band is receiving the full matching contribution. Deferral Rate

Figure 5

0%

5%

10%

15%

20%

25%

30%

35%

2008 2009 2010 2011 2012

1–2%

3–4%

5–6%

7–8%

9–10%

11–12%

13–14%

15%

< 15%
7

Investment Allocation and Inactivity 

In viewing 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 towards 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 (48%) of their accounts in the G Fund.

FERS Investment Allocation By Age (as of 12/31/2012)

Percent Allocated

Annual FERS Deferral Rates by Age, 

Tenure, and Salary Quintile

2008 2009 2010 2011 2012

Age

< = 29

30–39

5.2%

6.8%

4.9%

6.4%

4.7%

6.1%

5.0%

6.2%

5.6%

6.4%

40–49

50–59

8.1%

9.8%

7.7%

9.4%

7.4%

9.1%

7.4%

9.2%

7.5%

9.2%

60–69

70+

11.1%

12.3%

10.8%

12.2%

10.5%

11.9%

10.5%

11.8%

10.5%

11.9%

Tenure

Less than 2 years

2–5 years

4.3%

7.2%

4.2%

6.7%

3.9%

6.4%

4.2%

6.6%

5.2%

6.5%

6–10 years 8.3% 8.0% 7.8% 7.9% 7.8%

11–20 years

21 + years

9.1%

9.7%

8.8%

9.5%

8.6%

9.4%

8.8%

9.4%

8.7%

9.4%

Salary Quintile

Q1 Lowest Paid

Q2 Lower Paid

5.7%

7.7%

5.4%

7.3%

5.1%

7.3%

5.2%

7.5%

5.8%

7.7%

Q3 Mid-Range 8.3% 7.9% 7.6% 7.5% 7.6%

Q4 Higher Paid

Q5 Highest Paid

9.3%

10.2%

8.7%

9.9%

8.4%

9.7%

8.7%

9.7%

8.9%

9.9%

Table 2

Figure 6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

< = 29 30–39 40–49 50–59 60–69 70+

Lifecycle Funds

G Fund

F Fund

C Fund

S Fund

I Fund
8

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

allocation to the G Fund, nearly 61%. Although we previously noted the majority of automatically enrolled 

participants changed their contribution deferral rate, this high concentration in the G Fund among this tenure 

cohort suggests that these participants are not shifting their investments away from the default allocation, the 

G Fund. Further, the lowest-paid participants have approximately 60% allocated to the G fund as compared to 

the highest paid who allocated 33% to the G Fund.

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 L 2040 Fund. Participants who would likely 

retire between 2025 and 2035 (the 40–49 age group) were in L 2030 and L 2040. Participants aged 50–59 were 

solidly investing in the L 2020 Fund. The age 60–69 cohort was aggregated in the Income and L 2020 Fund, 

while those 70 and over were mostly in the L Income Fund (see Figure 7).

FERS Lifecycle Investment Allocation By Age

(as of 12/31/12)

We also want to note that L Fund usage is highest among the 2–5 years tenure cohort (24%) and the 6–10 

years group (21%). 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 (18%), where the impact of auto-enrollment and inertia are likely being felt.

Table 3 on the next page 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. As illustrated in the table, the majority of participants, regardless of age, tenure, or salary, 

do not actively manage their TSP accounts. While participants initiated a higher level of investment activity 

during the during the 2008 economic turbulence, the level of activity for any participant cohort did not exceed 

30% during that year.

Figure 7

L 2040 Fund

L 2030 Fund

L 2020 Fund

L Income Fund

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

< = 29 30–39 40–49 50–59 60–69 70+

Percent Allocated
9

Annual FERS Investment Inactivity by Age, 

Tenure, and Salary Quintile

2008 2009 2010 2011 2012

Age

< = 29

30–39

88.3%

84.1%

91.3%

88.8%

89.2%

87.8%

87.2%

86.8%

89.0%

88.8%

40–49

50–59

79.1%

76.0%

84.5%

81.5%

84.8%

80.8%

84.4%

81.1%

86.8%

83.9%

60–69

70+

74.6%

79.7%

80.8%

83.4%

77.7%

82.8%

80.9%

84.3%

84.0%

86.7%

Tenure

Less than 2 years

2–5 years

91.2%

87.6%

92.5%

91.2%

89.9%

89.3%

89.8%

88.6%

91.5%

90.6%

6–10 years 82.7% 87.2% 86.0% 85.7% 88.3%

11–20 years

21 + years

76.1%

70.7%

82.0%

77.2%

82.4%

77.2%

82.1%

76.7%

85.3%

79.9%

Salary Quintile

Q1 Lowest Paid

Q2 Lower Paid

89.3%

81.5%

92.9%

86.6%

91.3%

86.1%

91.7%

85.6%

92.8%

88.5%

Q3 Mid-Range 78.8% 84.1% 84.3% 84.1% 86.8%

Q4 Higher Paid

Q5 Highest Paid

75.7%

73.1%

82.2%

78.2%

81.4%

77.0%

80.6%

76.8%

83.3%

79.0%

Table 3

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 2012. All age groups experienced an increase in loan usage 

in 2012(see Figure 8 on the next page). While most age cohorts had an increase of approximately one percent 

or less, the cohort under age 29 had its loan usage increase by more than 2%.
10

FERS Loan Usage Age

Figure 9 reveals a stair-step pattern of loan usage among the salary quintiles, with loan usage generally 

declining as salaries increase. However, there is one notable exception as 2nd quintile participants had higher 

loan usage than the lowest-paid participants from 2008 through 2011. That trend reversed in 2012, when loan 

usage among the lowest-paid participants increased by more than 2% from the prior year. 

FERS Loan Usage by Salary Quintile

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 tax 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 each year in this reporting period (see Figure 

10 on the next page). The three youngest cohorts experienced a slight increase in withdrawal usage in 2012 over 

the previous year.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2008 2009 2010 2011 2012

Figure 8

< = 29

30–39

40–49

50–59

60–69

70+

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2008 2009 2010 2011 2012

Q1 Lowest Paid

Q2 Lower Paid

Q3 Mid-Range

Q4 Higher Paid

Q5 Highest Paid

Figure 9 Percent with Loan Percent with Loan
11

FERS Hardship Withdrawal Usage by Age

Age

As with loan usage, there is a similar stair-step pattern of hardship withdrawal usage among the salary quintiles, 

with usage generally declining as salary levels increase (see Figure 11). Again, the 1st quintile presents an 

exception to this pattern, as hardship withdrawals were lower than those of the next lowest quintile in each of 

the years examined. However, hardship withdrawal usage did increase noticeably (almost 1%) within the 1st 

quintile this salary quintile in 2012. 

FERS Hardship Withdrawal Usage by Salary Quintile

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2008 2009 2010 2011 2012

< = 29

30–39

40–40

50–59

60–69

70+

Figure 10

Figure 11

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2008 2009 2010 2011 2012

Q1 Lowest Paid

Q2 Lower Paid

Q3 Mid-Range

Q4 Higher Paid

Q5 Highest Paid

Percent with Hardship Percent with Hardship
12

Summary

The analysis reveals an improvement in both the FERS participation and deferral rates. Participation was at a 

five-year high of 88.6% by the end of 2012, while the contribution deferral rate rose to 8.5%. However, the 

most notable finding is the impact of automatic enrollment on participant behavior. 

Automatic enrollment helped produce a 16% increase in participation among the shortest-tenured 

participants. Participants with less than two-years of tenure now participate at a rate of 97.9% — the highest 

rate of participation among all tenure bands. The vast majority of auto-enrolled participants have “engaged” 

with 68% making deferral changes.

The average overall contribution deferral rate is trending back towards pre-economic downturn levels. 

Additionally, the deferral rate for participants with less than two years of tenure increased to 5.2%, nearly 1% 

above the 2008 level. For the first time in five years, the average participant in this tenure cohort is receiving the 

full matching contribution. While deferral rates continue to aggregate in the 5–6% range, with 31.5% of TSP 

contributors falling in this range, more than 78% of FERS participants are estimated to be receiving the full 

match.

Participants aged 29 and under have a disproportionate percentage (48%) of their account balances in the 

G Fund. However, this group also has the highest utilization of the L Funds. We further note that L Fund usage 

is highest among the 2–5 years tenure cohort (24%) and the 6–10 years group (21%). 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 increased in 2012 with the youngest age cohort having an increase of 2% over the prior year. 

However, the highest loan usage is among the 30–39 and 40–49 age cohorts 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.
13

Year EE 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

2012 EE Count 2,038,162 1 407,633 407,634 815,266 815,267 1,222,898 1,222,899 1,630,530 1,630,531 2,038,162

Salary $10,000 $50,839 $50,839 $56,746 $56,746 $73,396 $73,396 $97,333 $97,333 $230,700 

2011 EE 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 EE Count 2,110,401 1 422,081 422,082 844,161 844,162 1,266,239 1,266,240 1,688,321 1,688,322 2,110,401

Salary $10,000 $11,538 $47,900 $47,900 $55,530 $55,530 $67,762 $67,762 $92,431 $230,700 

2009 EE 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 

2008 EE Count 1,898,689 1 379,738 379,739 759,476 759,478 1,139,214 1,139,215 1,518,952 1,518,953 1,898,689

Salary $10,000 $45,171 $45,171 $52,526 $52,526 $60,978 $60,978 $84,578 $84,578 $221,100 

AppendixFERS Salary Quintiles