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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD ANNOUNCES
VENDOR SELECTION FOR LIFECYCLE FUNDS

     Washington, D.C. (November 17, 2004) – The Federal Retirement Thrift Investment Board announced today that Mercer Investment Consulting, Inc. (Mercer), one of the nation’s largest investment consulting firms, has been selected to assist in the development of lifecycle funds for the Thrift Savings Plan (TSP).  Mercer, which was selected through a competitive procurement, has a successful history of assisting with the design and implementation of lifecycle funds for both public and private sector retirement plans.

     Lifecycle funds are asset allocation portfolios with investment mixes tailored to a participant’s target time horizon.  The target horizon is generally when the participant intends to withdraw the funds.  As the withdrawal date approaches, the fund’s investment mix automatically becomes more conservative (i.e., less risky).  Participants who select lifecycle funds do not need to reallocate their account assets to achieve this result; the lifecycle investment models automatically reallocate the account for the participant.

     Gary A. Amelio, Executive Director of the Agency, first proposed the addition of the lifecycle funds when he accepted his position in May 2003.  “From an investment perspective, it was the only material gap in the TSP and the next logical step in keeping the TSP consistent with the best plan designs in the industry” according to Amelio.  “I’m grateful to all of the vendors who submitted excellent proposals, and energized by the prospect of tapping Mercer’s extensive experience in bringing the option of lifecycle funds to TSP participants.”

     TSP participants currently choose their own asset allocations among the five TSP investment funds.  Three of these (known as the C, S, and I Funds) track major stock indexes (the S&P 500, Wilshire 4500, and the Morgan Stanley Europe, Australasia, and Far East, respectively), while one (the F Fund) tracks a major bond index (Lehman Brothers Aggregate).  The fifth (the G Fund) is a Government securities fund.  The new TSP lifecycle funds will comprise investments in the five existing funds in proportions established by professional asset management principles.

     Mercer will assist the Agency in defining the target asset allocations.  A second part of the Request for Proposals is for the selection of a vendor to help prepare informational materials that will explain lifecycle funds in detail.  These materials will be made available to participants before the implementation, which is anticipated in mid-2005.  A vendor selection in that competitive procurement is expected to be announced before the end of 2004.

     Amelio also voiced great enthusiasm regarding this upcoming communications effort.  “I’m thrilled that we will have this opportunity to rejuvenate interest in the TSP through a major education initiative in connection with the lifecycle funds.  It will be invaluable not only for participants who choose the lifecycle approach, but it also will elevate the knowledge of those who study their options and decide not to do so.”  According to Amelio, “all participants are winners in this process.”

     The TSP is a retirement savings plan for Federal employees; it is similar to the 401(k) plans offered by many private employers.  As of October 31, 2004, TSP assets totaled more than $143 billion, and retirement savings accounts were being maintained for nearly 3.4 million TSP participants.  Participants include Federal civilian employees in all branches of Government, employees of the U.S. Postal Service, and members of the uniformed services.