New TSP Lifecycle Funds in 2020
In 2020 expect more options to come to the TSP with the addition of several new lifecycle funds.
The L fund will now be able to be adjusted every five years, a much lower amount of times than offered previously, and set up to give enrollees a better window to line up their assets with their projected date of retirement. This puts it in line with a lot of private-sector options, keeping the TSP relevant for retirees of federal work.
The goal of the agency is to have the five-year L fund up, and operational come the fall of 2020. This should help set up people who come to federal workers in the middle of their working careers, and other military personnel who are now a part of the TSP due to their enrollment in the blended retirement system.
Right now, enrollees in the TSP can access only five separate funds: the L 2050, the L 2040, the L 2030, the L 2020, and the L Income. Wit h the new offerings coming to the TSP that will expand to include: the L 2065, the L 2060, the L 2055, the L 2045, the L 2035, and the L 2025.
With these added options comes the plan to also move the focus of the TSP more towards lifecycle funds instead of some of the other popular funds. This shift is meant to fill in the gaps in wages that a retiree might have even after collecting Social Security and their FERS benefits. The L 2060 is the newest L fund rolling out, and as it is offered up, the TSP is intending to be the main investment for starting workers, making up for 99 percent of their holdings. This is set to decrease over time, though, as the worker gets closer to leaving federal employment.
This shift to the L fund will not happen overnight, and is intended to be rolled out slowly, over the next 15 years, ensuring a smooth transition, which will be extra important considering the additional TSP change coming up for the I fund too to include more emerging markets and other investments by offering up 6000 companies worth of stock options.
Beyond these significant changes comes an even more in-depth look at the risks that the TSP faces going forward. As of this, the agency has narrowed it down to 21 points that need to be mitigated to keep the fund operational and secure.
IT is one of the main risks and one that the TSP has historically struggled with, suffering slow implementation of oversight as well as a hacker attack back in 2012 where personal data from TSP enrollees were stolen.
Many of the solutions to these risks will take many years to unroll. These are long term fixes the agency is in search of, not just bandaids for their wounds. Already, the TSP has teamed up with the DHS to develop a diagnostics program to asses further and upcoming risks, as well as moving many operations of the agency to the more-secure cloud-based storage systems.
