“I think that people fairly quickly got used to our new website and people are not shy, the people we deal with. We made an adjustment there and that of course is the beauty of the website. It’s an eminently flexible tool. Everybody can have it their own way, and you can reset the whole thing to bring in what you want to see and that’s what we’re doing when we listen to what’s coming into the webmaster.”
As far as the different funds available in the TSP automatic enrollment plan, Trabucco explained the options:
G Funds: are “the safest security available,” Trabucco says, “it’s backed by the full faith and credit of the federal government, it never has a bad day, and it’s always on an upward trejectory, although a slow upward trejectory these days because of the low interest rate environment.”
F Funds: are a corporate bond or a “stable value fund”. Trabucco says: “It can have negative months, however it has done quite well this year in a declining interest rate environment and the reason for that is if you have bonds in your portfolio that pay a set rate, and the new bonds that are being issued today pay a lower rate, you’re ahead of the game, because your bonds are paying higher than the current market is paying.”
C Funds: are common stock investment funds, and they essentially mirror the S+P500. S Funds are a small cap stock index investment fund, and they invest in a stock fund interest that tracks the Dow Jones.
I Funds: are an international stock fund and they’re objective is to match the performance of the Morgan Stanley Capital International EAFE (europe, Australasia, Far East) Index.
Trabucco says it is too early to tell how well the automatic enrollment plan is going, however they have been able to analyze numbers from June of this year and the previous year.
“I did see one number that jumped out at me. In June of last year, which is when we started implementing this new legislation which was signed in June of 2009 we had 4.12 million accounts. In June of this year we have 4.31 million accounts or a growth of 220,000 acounts. What that reflects is, that we did put in immediate employer contributions of June of last year, so now whenever anybody is hired, they automatically start getting the employer agency 1% contribution. Now with the implementation of automatic enrollment, we are putting money into those accounts. There was a 1% contribution going in from the agency before but now there is 3% from the employee and a matching 3% on top of that.”
Besides the various funds available, the Roth option will go into place at the end of 2011.
“People will be able to elect with contributions beginning in January of 2012. We are working on it now already and this is going to be a challenge to come up with something that maintains the simplicity that the TSP is known and respected for and to put this in because it does complicate things. You have to look at tax consequences when you’re going to be comparing and deciding whether you want to go the Roth route or the traditional route.”