Smart Savings Act

Floor Speech

BREAK IN TRANSCRIPT

Mr. GOSAR. Mr. Speaker, I yield myself such time as I may consume.

The Smart Savings Act, H.R. 4193, would change the default investment fund for Thrift Savings Plan, or TSP, participants from the G Fund to an age-appropriate asset allocation fund consistent with a recommendation from the TSP governing board. The change would help ensure TSP participants are better prepared for retirement by investing their contributions in a fund designed to yield higher returns over the course of their career.

Currently, new TSP participants are defaulted into the Government Securities Investment Fund, or the G Fund, and remain invested there until they can make an election reallocating their account balance into one or more of the other funding options.

The G Fund comes with some risk. The TSP warns G Fund investors that their account may not grow enough to offset the reduction in purchasing power that results from inflation.

The TSP's asset allocation funds are a mix of the TSP's offerings designed to help yield higher returns while decreasing risk as individual participants near retirement. While the funds expose participants to market risk, they address such risk in their design.

In making its legislative recommendation to Congress, the TSP found that, had the asset allocation funds been the default investment option since the beginning of the automatic enrollment in 2010, participants would have achieved greater returns.

Participants who do not want to assume the market risk associated with the L Fund will, of course, maintain their ability to determine their own allocation. That can include, for instance, transferring their entire balance to the G Fund if that is their desire.

I appreciate the bipartisan support of Representatives CUMMINGS, WOODALL, LYNCH, FARENTHOLD, CONNOLLY, and Delegate Norton, and urge support for this bill.

I reserve the balance of my time.

BREAK IN TRANSCRIPT

Source