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Military TSP contributions unmatched
- Thread starter bmneveu
- Start date
RealMoneyIssues
Well-known member
Interesting first post; welcome to the forum!
The simple answer is that the military doesn't feel it's necessary as a recruiting/retention tool.
The law allows matching for the military, and the Army did a test case on matching as a recruiting tool, but it didn't help much so the report back to congress just confirmed the military's stance on no matching funds.
I am sure the military would probably say the cost would be excessive and that the number of folks the go in and out of the military would probably raise the maintenance costs of TSP (complete rubbish).
You could probably Google this topic and get a bunch of information too.
http://www.tsptalk.com/mb/showthread.php?t=1794
WorkFE
Well-known member
welcome bmneveu,
I asked that question myself. It has been along time for me but one of the reasons (I rationalized) is that as a military person you already have the benefit of a noncontributory pension after 20 years.
Yes retention plays a big part in it. If you research the past 20 years or so you will see that they have meddled with the military retirement system a few times. When things are going great they have a tendency to try and discourage retention. When the economy is chugging along and they are begging people to stay they encourage retention. Very much like the bonuses you see appear and disappear.
Retirement, Bonuses, retention control points are all tools.
I asked that question myself. It has been along time for me but one of the reasons (I rationalized) is that as a military person you already have the benefit of a noncontributory pension after 20 years.
Yes retention plays a big part in it. If you research the past 20 years or so you will see that they have meddled with the military retirement system a few times. When things are going great they have a tendency to try and discourage retention. When the economy is chugging along and they are begging people to stay they encourage retention. Very much like the bonuses you see appear and disappear.
Retirement, Bonuses, retention control points are all tools.
money_bags
New member
I have to agree with you, and I believe that the PRIMARY reason the military TSP doesn't match is because of the free healthcare and other low costs associated with being an "employee" (life insurance, healthcare, tax breaks, etc.) In most other jobs, employees must pay for their coverages. So it seems like if they did matching, they would cut a cost in another benefit...perhaps.
James48843
Well-known member
History note: When TSP began, the Military did not have the option of contributing. It wasn't until the mid 1990's that talk of adding the military even began.
At the time, (Post Gulf-War, big post-cold war draw down) there was a lot of opposition within the military to the TSP. The thought was, including at the senior levels, that offering the TSP was going to be the pre-thing to doing a massive change in the military retirement system. Rumors circulated that if they gave the Military the TSP and matching, that the federal government would then change the retirement system and do away with the 20-and-out retirement.
That in at of itself killed Congress's adopting TSP for the military for several years. It wasn't until around 2000 or 2001 that Senior leaders in the military finally relented, and agreed to allow the TSP to be offered at all. And then it took a little while to get Congress to approve it, and when Congress looked at it - they said they would let people DO the TSP in the military, but if the Military wanted any matching funds, they would have to do that out of existing budget dollars, and ...well, that's how we got to where we are today.
The good news is that active, Guard and Reserve people can all now establish a TSP account.
The bad news is that the Guard and Reserve do a horrible job of publicizing it, and even the active forces have a long way to go to get participation rates up. especially with no matching funds. .
At the time, (Post Gulf-War, big post-cold war draw down) there was a lot of opposition within the military to the TSP. The thought was, including at the senior levels, that offering the TSP was going to be the pre-thing to doing a massive change in the military retirement system. Rumors circulated that if they gave the Military the TSP and matching, that the federal government would then change the retirement system and do away with the 20-and-out retirement.
That in at of itself killed Congress's adopting TSP for the military for several years. It wasn't until around 2000 or 2001 that Senior leaders in the military finally relented, and agreed to allow the TSP to be offered at all. And then it took a little while to get Congress to approve it, and when Congress looked at it - they said they would let people DO the TSP in the military, but if the Military wanted any matching funds, they would have to do that out of existing budget dollars, and ...well, that's how we got to where we are today.
The good news is that active, Guard and Reserve people can all now establish a TSP account.
The bad news is that the Guard and Reserve do a horrible job of publicizing it, and even the active forces have a long way to go to get participation rates up. especially with no matching funds. .
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