An association that represents active and retired federal workers has admonished Congress for a plan that would divert money from a Thrift Savings Plan investment fund to pay for the government’s Highway Trust Fund.
The Highway Trust Fund is projected to exhaust most of its reserve cash by September following this summer’s highway construction season.
The National Active and Retired Federal Employees Association, an Alexandria, Virginia-based organization that is “dedicated to protecting and improving the retirement benefits of U.S. federal retirees, employees and their families,” believes Congress might be considering making major changes to the TSP G Fund in order to inject emergency cash into the financially distressed highway fund.
“It is our understanding that lawmakers tasked with determining a funding stream to finance the highway trust fund reauthorization have their sights set on a bedrock element of the independent 401(k) retirement accounts of the nation’s uniformed military personnel and federal civilian employees — the Thrift Savings Plan,” Richard Thissen, the association’s national president, wrote in a letter to the U.S. Senate in July.
Mr. Thissen cites a proposal that would alter the rate of return on the TSP G Fund, which in his words would render the “fund more than worthless, as returns wouldn’t even keep up with inflation.”
According to the association’s calculations that change would free up $32 billion, which could be funneled to the highway fund to prevent it from becoming insolvent.
“At a time when federal employees, retirees, job seekers, and their families are reeling from news that their most personal information and financial data has been compromised, it is unconscionable that this very constituency would be targeted for cuts to pay for completely unrelated legislation,” Mr. Thissen wrote in his letter to lawmakers.
He notes that approximately $193 billion is currently invested in the G Fund of the total $458.3 billion that active and retired civilian workers and military personnel have set aside in all TSP funds for earnings growth.
More than 4.3 million TSP participants, of a total 4.7 million that have invested money in various TSP funds, have invested all or some of their money in the G Fund, according to the association.
The G Fund “invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security,” according to the TSP website.
“The decision was made more than a quarter-century ago to keep the TSP off-budget and out of the hands of those who would use it as a piggy bank to pay for unrelated expenditures, or to reduce the federal deficit,” Mr. Thissen wrote. “The TSP belongs to the plan’s participants. It does not belong to the federal government, nor does it exist to pay for unrelated legislation, regardless of the worthiness or necessity of the legislation.”