Federal employees overall are satisfied with their 401(k)-style retirement savings plan, but many don’t understand its key features, according to an employee survey released Monday.


The Thrift Savings Plan governing board heard at its monthly meeting Monday that nearly a fifth of employees under the Federal Employees Retirement System — which generally covers those hired starting in 1984, more than 80 percent of the federal workforce — don’t understand the potential for employer contributions into their accounts.

That feature of the TSP is important for FERS employees, who stand to receive an annuity benefit worth only about half of what is paid to those under the older Civil Service Retirement System. Social Security benefits and the value of employer contributions to TSP accounts are designed to roughly make up the difference.

Although employees under CSRS get no employer contributions, those under FERS automatically get an employer contribution equaling 1 percent of their salary. If they invest from their salaries, FERS employees can receive up to an additional 4 percent of salary from the government, for a total maximum employer contribution of 5 percent.

However, in a survey conducted last fall whose full results were released Monday, 6 percent said they do not invest because they do not understand the TSP and 18 percent of FERS-covered employees did not know that they could receive up to 5 percent in employer contributions.

When FERS employees don’t invest from their salaries, “basically, they’re leaving free money on the table,” TSP Executive Director Greg Long said. He said that the matching contributions formula, along with the program’s low administrative costs in comparison with other forms of investing, are two of the main themes of the agency’s educational efforts, but “we still struggle with how to get the message out so that people understand.”

He said that those efforts will continue and noted that the upcoming introduction of Roth-style investing will further complicate the program. In Roth investing, the program’s traditional tax treatment will be reversed, with investments made with after-tax money but withdrawals being made tax-free, so long as certain conditions are met. Officials outlined educational plans, including decision-making calculators to be added to the TSP Web site, www.tsp.gov.

“This is a highly complex new feature. No matter how well we do it, we will leave some people frustrated,” Long said.

The survey showed that 86 percent of participants are satisfied or very satisfied with the program overall, and 92 percent consider the TSP at least as good as comparable plans. Participants gave high marks to ease in changing investments, access to accounts, customer service and the Web site.

Of those who invest in the TSP, the most commonly cited motivations were the tax benefits, the convenience of payroll deduction and the availability of matching contributions for FERS employees.

Of those who don’t invest, the most commonly cited reasons were being in a temporary period when investing is not allowed after taking a financial hardship withdrawal, lack of money available to invest and the related issue of needing access to the money before retirement, lack of matching contributions, concern about investment losses and dissatisfaction with investment options.