The lifecycle funds added to the Thrift Savings Plan four months ago are taking hold in the retirement program faster than expected, top TSP officials said yesterday.
About 200,000 government employees, or 5.5 percent of TSP participants, have put $6.8 billion into the L Funds, which represents about 4 percent of the TSP's assets, the officials said.
The percentages may seem small, but Gary A. Amelio, executive director of the Federal Retirement Thrift Investment Board, said consultants had estimated that the L Funds would not achieve a 5 percent participation rate until after a year of operation.
Amelio and Theresa A. Ray, chief investment officer for the TSP, presented the latest data on the funds at the board's monthly meeting. Andrew M. Saul, the board chairman, called the L Funds "a huge success."
Government employees are moving all or some of their retirement savings into the L Funds at a steady rate, and TSP officials noted that the funds picked up new investors at a rate of 10,000 a week at the start of November.
The TSP offers five L Funds, which use the plan's menu of index funds and a government securities fund as their foundation. TSP participants select the L Fund that most closely meshes with the time that they expect to be drawing down their savings for retirement.
With the L Funds, participants turn over their asset allocation and rebalancing chores to professional managers who seek to increase their savings while taking no more risk than necessary. Employees with many working years ahead of them see their L Fund shift from aggressive to conservative investments as they near the time they will start withdrawing money. Employees near retirement may choose a fund that minimizes stock holdings and market risks.
Ray said the most popular L Funds by retirement group are:
* The 2010 Fund, attracting employees in the old Civil Service Retirement System, probably the longest-serving government workers.
* The 2020 Fund, drawing participants covered by the Federal Employees Retirement System, created in the mid-1980s.
* The 2030 Fund, attracting the military and other uniformed services, who were allowed into the TSP in 2002.
Since their start Aug. 1 and extending through Monday, Ray said, the five L Funds have provided returns of 1.6 percent to 2.9 percent. The snapshot, she told the board, showed that the L Funds are "balancing out the volatility in the market," apparently a reference to the stock market's slump in October and rebound early in November.
Amelio proposed adding the L Funds to the TSP as a way to provide participants with the means to improve their diversification. About 39 percent of the TSP's assets are in the government securities fund, which never loses money, and another 39 percent of TSP assets are invested in the common-stock index that tracks the S&P 500.
Pamela-Jeanne Moran, director of TSP benefit services, told the board that vendors have finished mailing DVDs that explain the L Funds to civil service participants and that distribution of DVDs to members of the armed forces would conclude within weeks.
OPM Upheld on Contract
A protest filed against a contract for development and operation of the Office of Personnel Management's job recruitment Web site has been dismissed by the Government Accountability Office, which rules in federal contract disputes.
GAO upheld OPM's decision in July to award a $27.1 million contract to Monster Government Solutions of New York to run the USAJOBS online portal for federal job hunting. The contract is for one year with four option years. The OPM award was protested by Symplicity Corp. of Arlington.
OPM made a reasonable determination that Monster's bid, which received a higher technical rating, was worth the additional cost to the government, GAO said. Symplicity's proposed price for the work was $13.6 million.
Ronald C. Flom, an associate director at OPM, welcomed the GAO finding. The decision "totally vindicates OPM and shows that we know how to do our procurement business," he said.
FSAs & Diary Live
Laura J. Lawrence, an Office of Personnel Management expert on flexible spending accounts for federal employees, will take questions and comments about FSAs at noon tomorrow on Federal Diary Live at www.washingtonpost.com. Please join us.