With the European economy in turmoil, the Thrift Savings Plan's international fund has continued to dip, dropping an additional 2.11 percent drop since January, according to TSP administrators.

During Tuesday's Federal Retirement Thrift Investment Board meeting, Tracey Ray, the TSP's chief investment officer, said the economic situation in Europe -- including the current budget crisis in Greece -- was contributing to the decline of the I Fund. The fund, invested in international companies, fell 5.17 percent in January, dropping 7.17 percent overall so far in 2010.

Although battered by the financial crisis in 2008, the I Fund had been making steady progress, gaining 30 percent in 2009. Many TSP enrollees continue to invest in the international fund. In August 2009, the I Fund received 9 percent of monthly TSP contributions, and it currently represents about 8 percent of the overall TSP balance.

The other TSP funds are holding steady or have increased slightly in February, according to the board. But in January nearly all the funds, except those invested in government securities and fixed income bonds, took a hit. Ray said the decline was due in part to uncertainty in the market surrounding the confirmation of Ben Bernanke to another term as chairman of the Federal Reserve and proposals for financial regulation of banks.

Board members also discussed ways to increase participation in the TSP, which has seen a recent uptick in past months but overall has declined during the past decade. In September 1999, the TSP participation rate among employees in the Federal Employees Retirement System was 86.3 percent; in January 2010, it was 82.4 percent. Nonenrollees are collecting the 1 percent contribution which the government automatically provides to FERS employees. But since they are not contributing their own funds to the TSP, they aren't eligible for the government's 3 percent match.

Beginning in August, new government employees automatically will be enrolled in the TSP, as a result of legislation passed by Congress last year. TSP Executive Director Greg Long said he hoped that automatic enrollment eventually will increase the plan's participation rate to more than 90 percent.

"What I anticipate is not so much a huge jump, but the beginning of the wave," Long said.

But automatic enrollment will not have an effect on about 400,000 current federal employees who are not participating in the program. The agency already has sent brochures about the TSP to those employees, and plans to follow up with more promotional material.

Long said the agency board would try to push the message that the government's matching contributions are "free money," but also would have to respect those who believe that they can't afford to enroll.

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