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Thrift Savings Plan Offers Employees Investment Choices

By Douglas J. Gillert
American Forces Press Service

WASHINGTON, Nov. 8, 1996 – Federal civilian employees can begin or change deposits to the Thrift Savings Plan during open season, Nov. 15 to Jan. 31. The amounts they identify, according to officials, should reflect their projected financial needs when they retire or separate from federal service.

Most civilian employees fall into one of two retirement categories, the Civil Service Retirement System or the Federal Employees Retirement System. Those under the newer FERS can contribute up to 10 percent, and they receive up to 5 percent in matching funds from their agency. Those in the CSRS can contribute up to 5 percent of their base salary to the plan and receive no matching funds.

FERS employees are allowed larger contributions and matching funds because the Thrift Savings Plan is a more important component of their retirement earnings, according to officials at the Federal Retirement Thrift Investment Board. Those under CSRS earn a larger annuity and don't, therefore, rely as much on the investment plan for retirement income.

The board administers three investment funds:
  • The C fund diversifies investments in United States stock markets. Investments in the C fund earned 37.41 percent interest in 1995. A word of caution to new investors: While the C fund tends to yield high returns, it also presents a higher risk. As the stock market goes, so goes the C fund. Declining stock values can and have resulted in net losses to Thrift Savings Plan investments in this fund.
  • The F fund invests in notes, bonds and other obligations that return the amount invested and pay interest at a specified rate over a given period of time. The F fund yielded earnings of 18.31 percent in 1995.
  • The G fund invests in shortterm, nonmarketable U.S. Treasury securities specifically issued to the Thrift Savings Plan. Investments earn interest at a rate equal to average market rates of return on outstanding U.S. Treasury marketable securities with four or more years of maturity. The G fund returned 7.03 percent on 1995 investments.

The 1997 federal budget authorized two more Thrift Savings Plan funds, the International Stock Index Investment Fund and the Small Capitalization Stock Index Investment Fund. Investment board officials said these funds will become available for investment in two to three years.

Two pamphlets providing Thrift Savings Plan details, "Summary of the Thrift Savings Plan for Federal Employees" and "Guide to TSP Investments," are available at civilian personnel offices.

In addition, current contributors can call the New Orleansbased Thrift Savings Plan ThriftLine ([504] 2558777) anytime for information on monthly rates of return for the three current funds and the most recent 12month return rates. They also can use the ThriftLine to check their account balance and the status of loan or withdrawal requests. They also can use the line to make, change or cancel interfund transfers.

The ThriftLine offers the fastest and most efficient access to Thrift Savings Plan general and account information for current contributors, according to investment board officials. For first time users, however, officials said the place to begin is at local civilian personnel offices.

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