How Does the TSP Differ from the FERS Basic Annuity and the CSRS Annuity?

The Thrift Savings Plan (TSP) is a defined contribution plan.  The retirement income that you receive from your TSP account will depend on how much you (and your agency, if you are a FERS employee) have contributed to your account during your working years and the earnings on those contributions.

The contributions that you make to your TSP account are voluntary and are separate from your contributions to your FERS Basic Annuity or CSRS annuity.

In contrast to the TSP, the FERS Basic Annuity and the CSRS annuity are defined benefit programs.  This means that the benefits you receive from your FERS or CSRS annuity are based on your years of service and your salary, rather than on the amount of your contributions and earnings. 

Most of the contributions to these annuity programs are made by your agency on your behalf.  Your contributions are mandatory and the amount you contribute is defined by law.  Your contributions are made by payroll deductions that your agency takes automatically from your paycheck.  The FERS Basic Annuity and the CSRS annuity are administered by the Office of Personnel Management.

On the other hand, your TSP contributions are voluntary, and in an amount you choose.  Your TSP benefits are in addition to your FERS or CSRS annuity.  If you are a FERS employee, the TSP is an integral part of your retirement package, along with your FERS Basic Annuity and Social Security.  If you are a CSRS employee, the TSP is a supplement to your CSRS annuity.