Thrift Savings Plan. The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan. Congress established the TSP in the Federal Employees' Retirement System Act of 1986. The purpose of the TSP is to provide retirement income.The TSP is a defined contribution plan.The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions.he TSP is a defined contribution plan. The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions.