Don’t raid the TSP to save the federal government’s budget woes.
That’s the message to Congress delivered by the Employee Thrift Advisory Council, an organization composed of federal worker rights groups, unions, and uniformed services.
The council advises the Federal Retirement Thrift Investment Board, the TSP’s administrator, and represents roughly 4.9 million TSP account holders throughout the uniformed and non-uniformed federal workforce.
This year, a few legislators suggested that one particular TSP’s funds rate of return, the G Fund, should be adjusted in order redirect a potential revenue savings to compensate for the government’s woefully underfunded, severely distressed budget.
While that proposal does not appear like it will gain much traction in Congress today, the ETAC still issued the stern warning to House and Senate leaders just in case they think they can turn to the TSP to help close enormous revenue-spending gaps in the federal budget.
“Just the suggestion of a change to the TSP indicates to the employees we represent that the TSP can be manipulated by Congress — that their funds could be used to pay for other programs,” the council wrote in a letter (.pdf) to Congressional leadership. “It indicates that the TSP is no longer a secure place to put their retirement money.”
Ultimately, Congress should also “declare the TSP off-limits as a source of revenue,” the council wrote.
As you may already know, the TSP is one of three essential components of your federal retirement plan, along with your basic annuity (pension) and Social Security. The TSP is similar to a 401(k) in which participants make deposits, the government matches, and the funds, depending on which one you invest in, provide varying rates of return to current and retired federal workers.
However unlike a 401(k) or even an IRA, the government can exercise a lot of control over the TSP. But the idea that Congress would use the TSP to patch the federal budget is counter to fiduciary duty and responsibility — to always act in your interest especially when it comes to your finances and hard-earned investments.
We’ll keep an eye on these events; apparently, the TSP may not be as safe and stable as we hoped.
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