TSP expenses (i.e., the cost of administering the program) include the costs of operating and maintaining the TSP’s recordkeeping system, providing participant services, and the printing and mailing of notices, statements, and publications.
These expenses are paid from the forfeitures of Agency Automatic (1%) Contributions of certain Federal employees who leave Federal service before they are vested, other forfeitures, loan fees, and — because those forfeitures are not sufficient to cover all of the TSP’s expenses — earnings on participants’ accounts.
The effect of administrative expenses (after forfeitures) on earnings of the G, F, C, S, and I Funds is expressed as the net expense ratio of each fund. The expense ratio for a fund is comprised of the total administrative expenses charged to that fund during a specific period, divided by that fund’s average balance for that period.
Since the L Funds do not have any unique administrative expenses, they do not have any additional charges. Therefore, the L Fund administrative expense ratios are weighted averages of the expense rations of the G, F, C, S, and I Funds.
For 2015, the average net expense was $0.29* per $1,000 invested.
Your share of TSP average net administrative expenses is based on the size of your account balance. For example, the G Fund’s expense ratio* for 2015 was .029%. Therefore, if you invested in the G Fund in 2015, earnings were reduced by 29 cents per $1,000 of your G Fund balance.
* Fees associated with securities lending are not included in 2015 administrative expenses. Consistent with standard practice in the industry, they are charged in addition to administrative expenses. Other expenses are disclosed in the financial statements and are available in the April 2016 Highlights.