Ask The Experts: Money Matters

By Mike Miles

Personal Investment Performance

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Q. When the Thrift Savings Plan calculates my Personal Investment Performance, are the matching funds that the government deposits considered part of the investment, or are they considered part of the investment return? For example, if my PIP for the past year is 10 percent, did I actually earn 10 percent on all of the money in the account, or is it only 10 percent because the government added to my balance?

A. From the TSP website:

Personal Investment Performance (PIP) — The rate of return earned by your entire account during the 12-month period ending on the date indicated on your annual statement or on your Account Balance page of the TSP website. The PIP is a time-weighted return that has been calculated using a modified-Deitz method (a method used by many financial institutions and an industry standard). The PIP adjusts for the distorting effects of cash flows into or out of your account. It is an estimate; therefore, your PIP may not be the same as the 12-month performance of the TSP funds, which are time-weighted returns.”

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Comments

  1. USPS Letter Carrier Says:
    May 31st, 2013 at 11:51 pm

    “did I actually earn:
    A) 10 percent on all of the money in the account,
    B) or is it only 10 percent because the government added to my balance?”

    Answer is A). The government match is considered part of your money / investment for the calculation. Let’s say you invest 5% and get the 5% match and the share price for a hypothetical L 20XX is $20 in Jan 1 and $20 at the end of the year Dec 31. You have doubled your money but your PIP is ~0%.

    My Excel calculations matches the PIP for the last several years and I use the match as part of the investment.

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