Reply #6: Thrift savings was intended to make up for reduced Civil Service benefits [View All]

[wishlist]

I was a Federal employee when the new Civil Service retirement plan including coverage under Social Security was instituted in the 1980's. It was less generous and drastically cut cost of living increases for early retirees, so in order to placate opponents and try to get older employees to switch voluntarily, they provided matching Thrift Plan contributions up to 5% of salary to those under the new plan. Everyone was told that the only way to make up for the shortfall under the new plan would be to participate in the Thrift Savings plan to get matching contributions.

I don't believe it has been explained that much of the success and popularity of the Thrift plan is the 5% matching contributions which provide a much larger benefit than people could get from non-matching contributions on only 1 or 2 % of salary. Also, Federal employees have more control over their Thrift plan accounts since they can borrow from and draw out the funds with more flexibility than will be offered under Bush's plan.