TSP board: Don’t worry about the G Fund as debt ceiling looms

Anneka/Shutterstock.com

The board that manages the Thrift Savings Plan expressed confidence Tuesday over its operations if the government hits the debt ceiling again and is forced to tap federal retirement accounts to avoid a default.

Susan Crowder, acting chief financial officer of the Federal Retirement Thrift Investment Board, said FRTIB has talked with the Treasury Department about the process in place. Enrollees will not be affected if the government suspends investments into the government securities (G) fund until the debt limit is increased, and it will be “business as usual,” Crowder reminded board members. The government is expected to hit its debt ceiling of $16.4 trillion at the end of December but has until February 2013 to avert a default if it uses the tools at its disposal, according to most observers.

The law allows the government to take extraordinary measures to avoid a default, including tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the G Fund, the most stable offering in the Thrift Savings Plan's portfolio. The G Fund is invested in interest-bearing Treasury securities -- bonds -- that make up the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees' Retirement System, and those investments are made up of securities also considered part of the public debt. Federal law (Sections 8348 and 8438 of U.S. Code Title 5) requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund once the issue of the debt ceiling is resolved, and in addition, to make up for any interest lost on those investments during the suspension.

“We understand how it works,” James Petrick, acting executive director of the board, said of the Treasury’s G Fund option during a debt issuance suspension period. “The process -- it’s hard to say it operates smoothly -- but it really does operate smoothly.” The government last suspended investments into the G Fund because of the debt ceiling nearly a year ago, in January 2012.

FRTIB also is closely monitoring negotiations between Congress and the Obama administration over the so-called fiscal cliff. The market is in a holding pattern at the moment while political leaders try to broker a deal before the end of the year over a series of expiring tax cuts and looming governmentwide budget cuts resulting from sequestration.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.