GovernmentExecutive.com

The number of outstanding loans at the Thrift Savings Plan has dropped in recent months after officials at the plan instituted new fees and regulations on borrowing.

Gary Amelio, executive director at the Federal Retirement Thrift Investment Board, said earlier this year that a small minority of plan participants were taking out most of the loans. Each loan costs about $50 to process and TSP officials said that financial burden was being distributed unfairly.

As a result, the TSP Board implemented a $50 transaction fee for each loan and simultaneously changed regulations to limit participants to one general purpose loan at any given time. Since those changes took effect earlier this year, the number of loans has steadily dropped.

The TSP, which operates as a 401(k)-style retirement resource for federal employees, has more than 3.2 million participants and more than $140 billion in assets. A little more than $5.2 billion is currently out in the form of loans.

"There's been a slow, steady, decrease in the number of loans," Amelio said Tuesday at a meeting of the Employee Thrift Advisory Council. "We're pleased to see the reduction." He did not provide specific figures for the decrease in loans.

Amelio said the reduction is improving efficiency at the TSP and would have "a multitude, a rippling, of positive effects."

Loans have traditionally increased sharply during some parts of the year, including late summer, as students return to school and federal employees take out general purpose loans to help cover tuition payments.

"We've noticed a significant decrease in those spike months," Amelio said.

TSP officials said that the decrease in loans is a stark departure from the year before the new regulations were put in place. Amelio said the number of loans in the year before the regulations "was going up significantly."

Although plan participants may no longer take out more than one general purpose loan, outstanding loans were not affected retroactively by the new rules. As a result, many federal employees still have more than one general purpose loan that have not come due.

As those are paid off, officials said, the overall number of loans will drop even further. Amelio predicted that it would take about five years for the number of loans to bottom out. He said that he expects the number of loans to decrease by about 40 percent during that period.

COMMENTS

• Apparently someone needs to be reminded of why the civil service was established - several someones, in Washington. Of course, that's exactly what they want to do away with, a group of government people that are hard to beat into whatever shape the current polticians want them to assume. GovExec.com reader Posted November 15, 2004 5:59 PM
• Dear Participants: Soon 140 of my co-workers will be released from Federal Employment at the Department of Agriculture's National Finance Center. Our Thrift Savings Plan Division is losing funding for 140 positions. The majority of the grades being lost are GS-5,6 and 7. Amelio and Saul do not have to look at their faces or contemplate the effects on their families, their children, their marriages. This is just another "business decision" for Amelio and Saul. It would be easy for me and others here at NFC to accept their decision to reduce funding to NFC ... if we were giving poor service or could be replaced by a more efficient, effective private contractor. I cannot buy into the argument that NFC has been a poor provider of services to the Thrift Investment Board. I know what we do. We do it well. We have done it well under trying circumstances. We read the half-truths in GovExec articles. We read the distortions of the facts in GovExec articles. We read the outright lies in GovExec articles. But, you know ... the hardest thing for me to read is the letters in GovExec written by participants who believe the lies told about NFC and our workforce here as if we are the reason for the problems experienced by the Thrift Savings Plan. The agenda nationwide is and has been for many years now to gut the Federal Civil Service System. They use nice phrases. They want to create a "level playing field" where the private sector can compete against the "civil servants". They want to use "Outsourcing" "Right Sizing" to save the taxpayers money. Of course the "reports" they give are usually suspect. Statistics manipulated to "report" a desired result. ie. a decrease in loans (with no mention of an increase in in-service withdrawals) An alternate call center staffed by low paid, non-civil servants, with no background checks and with access to a data base, which includes, I might add, not only your name and personal information, but data on Representatives and Senators and Federal Judges. (Any comments from the Department of Homeland Security?) They talk about the one day we were closed for a Hurricane and mention nothing about the snow storms and blizzards that will shut down the East Coast from time to time. Do we need to be reminded of the reason the Federal Civil Service System was established in the first place? GovExec.com reader Posted November 13, 2004 11:08 AM
• My sentiments exactly to the Swamp Queen. When I lose my job can me and a couple of hundred other displaced federal employees come get jobs at one of your new system contractors? You know the ones that have that system that can't get the payments to the Participants, remember the people that pay the cost overruns and whatever no matter what? Loose Change Posted November 11, 2004 2:29 PM