Summary: As of September 1994, about 940,000 federal workers covered by the Federal Employees Retirement System (FERS) were voluntarily contributing an average of 5.7 percent of their salaries to the Thrift Savings Plan. Most of the remaining 300,000 workers covered by FERS who were not contributing were in the lower pay ranges. Lower-paid workers who were contributing were doing so at lower rates than higher-paid workers--an average of 4.4 percent of their salaries. However, lower-paid workers may achieve satisfactory retirement income levels even with low contribution rates because Social Security benefits are proportionately greater for them than for higher-paid workers. Higher paid workers need to defer at least five percent of their salaries throughout their careers--if not more--to achieve retirement income of 60 to 80 percent of their preretirement salaries. Educating FERS workers can play a key role in their making wise preretirement investment choices. Although Thrift Savings Plan materials discuss the plan's financial aspects, they do not explicitly discuss how the Thrift Savings Plan can help workers covered by FERS achieve their retirement income goals. The Thrift Savings Plan Board is seeking legislation that would enable employees to invest in a domestic small capitalization fund and an international stock fund. GAO found that these two additions would make the Thrift Savings Plan's investment options more closely resemble those in similar private sector plans.
