Federal Retirement Thrift Investment Board FRTIB

When Congress replaced the old Civil Service Retirement System for new hires with the Federal Employees' Retirement System Act, signed on June 6, 1986, it added a defined-contribution savings plan alongside a smaller pension and Social Security. To run it, the law created the Federal Retirement Thrift Investment Board, an independent agency with five part-time board members appointed by the President, three of them recommended by congressional leaders, and a full-time Executive Director. Board members and the Executive Director are fiduciaries who must act solely in the interest of participants.

The Thrift Savings Plan, or TSP, lets federal civilian employees and members of the uniformed services save for retirement from their paychecks, with automatic and matching contributions for most civilian employees under FERS and for service members under the military's blended retirement system. Participants choose among a small set of low-cost index funds and target-date lifecycle funds. With roughly 7 million participants and assets approaching a trillion dollars, the TSP is the largest defined-contribution plan in the world, and its fees are among the lowest anywhere. Its money is held in trust and cannot be used for other government purposes.

Congress designed the plan to keep politics out of investment decisions by limiting it to broad index funds. That principle was tested when the board voted in 2017 to switch its international fund to an index that included Chinese companies, prompting bipartisan objections on national security grounds and a reversal in 2020. A 2022 move to a new recordkeeping contractor drew widespread complaints about service problems. Supporters say the TSP is a model of a simple, cheap, and well-run retirement plan, while some critics argue for wider investment choices or for using it to advance policy goals.