A congressional proposal to expand the Thrift Savings Program to members of the military would flood the program with hundreds of thousands of new members, cost millions of dollars and require boosting staff – and the TSP is up to the challenge.

The Military Compensation and Retirement Modernization Commission recommended in January that the military move from a pension system that rewards 20 years or more of service to a blended plan involving a pension and Thrift Savings Plan contributions. Congress has followed suit with legislation that mirrors the recommendations.

While service members can currently contribute to the TSP they receive no matching contribution from the military. Under the proposed plan – one that closely mirrors federal civilian plans - service members would see their contributions matched up to 5 percent of their salary, plus a base of 1 percent regardless of their contribution levels.

The plan could mean about 750,000 service members opting in to the new system in its first year, while roughly 150,000 new members would be eligible to sign up every year, according to Kim Weaver, the spokeswoman for the Federal Retirement Thrift Investment Board, which runs the TSP.

She said the agency has had talks with members of the military, Congress and the retirement commissioners about the possible expansion. Under the congressional proposal, the program would kick in for service members joining Oct. 1, 2017 or later.

Some of the 750,000 new participants would already have TSP accounts, but they would need to be "reprogrammed" to reflect the new matching funds, Weaver said.

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She said the agency estimates the cost of rolling out the new system at about $10 million – roughly the cost of its effort to roll out a Roth investment option within the TSP. That roll out took about two years.

The agency would also have to revise all of its printed materials and guides to incorporate the new changes, and update some of its existing IT systems, Weaver said.

"We would have to make changes to the TSP record-keeping system - the IT system used to record all participant information - to accommodate the specifics of the new US plan, update tsp.gov, and create calculators and other educational tools to address the specific requirements of the new program," weaver said.

The agency would also have to re-evaluate its staffing needs to handle possible increases in forms processing, tax reporting, court-order processing, death benefits processing and other services the TSP provides, Weaver said.

" In addition, we would have to evaluate our to "back office" staffing to allow us to have our call centers ready to answer questions from service members who are either completely new to the TSP or have elected into the new system to receive matching contribution," Weaver said.

While the amount of money entering the TSP would greatly increase, that would not be a problem as the funds are passively managed – which means the heavy lift would be in accommodating new participants.

But despite the effort and the cost, the TSP is eager for the opportunity to provide new services to members of the military.

"While this will be a major effort for the FRTIB, we are excited about this opportunity to serve members of the uniformed services in a new way," Weaver said.

The proposal comes at a time of record-high participation among federal employees, and record-high funding within the TSP.

About 88.1 percent of federal employees in the Federal Employment Retirement System contributed to their TSP accounts in February – higher than at any other point. In 2014, the FERS participation rate was 87.5 percent.

The overall funds invested in the TSP also hit a record high - $451 billion in February – according to the agency. Invested funds have more than doubled since 2006, when the TSP held just more than $200 billion.

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