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Key developments in the world of federal employee benefits: health, pay, and much more.

G Fund Suspension Drags On, Pay Raise Deadline Looms

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The Congressional Budget Office now estimates the U.S. Treasury will run out of cash between mid-November and early December, thus giving Congress more time than previously believed to reach a budget deal (or more time to threaten a crisis, depending on your level of optimism).

In March, the country hit its statutory debt ceiling and Treasury began taking “extraordinary measures” to avoid default, including disinvesting a portion of the Thrift Savings Plan G Fund and limiting investment in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund.

What other measures might Treasury have to take that could affect federal employees? It could:

  • Suspend remaining investments of the G Fund;
  • Suspend the issuance of new securities for the CSRDF;
  • Redeem in advance securities held by the CSRDF of equal value to the benefit payments due in the near future.

As CBO notes, “Those measures provide the Treasury with additional room to borrow by limiting the amount of debt held.” By law, the G Fund and the Civil Service and Postal Service funds must be made whole after the debt limit is raised.

But that doesn’t mean the G Fund won’t face other challenges. The fund has served as a negotiating lever in recent budget negotiations. As Tammy Flanagan noted in a Retirement Planning column and Eric Katz reported in late March,  a House Budget Committee report takes issue with how the interest rate on the G Fund is calculated, arguing that “those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security.” Budget hawks are eyeing changes that would save taxpayers $32 billion over 10 years, which would render the fund “worthless” to feds, in the words of one TSP official.

One recent bright spot for for the TSP, despite the market turbulence, has been the spike in the F Fund. If you're among the 5 percent of feds invested in the fund, good for you. 

The Pentagon announced it is expanding the Defense Health Agency to include the Armed Forces Health Surveillance Center, the Armed Forces Medical Examiner System and the National Museum of Health and Medicine. The idea is to broaden the department’s connection with other federal partners, according to Air Force Lt. Gen. Douglas Robb, DHA director.

“Whether it’s identifying how to prevent or stem the outbreak of disease; doing the challenging work to help determine where our research and clinical practices can be directed to increase survivability; or simply allowing us to learn through history, these organizations advance our ability to support our warfighters and everyone who we serve.”

After its transition, AFHSC is becoming the Armed Forces Health Surveillance Branch, part of DHA’s Healthcare Operations Directorate. Its mission is to protect the health and readiness of the military against illness or injury during training exercises as well as deployment.

Finally, time is running out for President Obama to propose a pay raise for feds in 2016. He has until the end of the month. The smart money is on a 1.3 percent across-the-board hike, but don't spend it yet. 

(Image via Luis Louro/Shutterstock.com)

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