Hitting the debt ceiling would not have any long-term effects on the Thrift Saving Plan’s G Fund, despite any temporary investment suspensions, according to the board that manages the retirement savings plan.
TSP Executive Director Greg Long issued a statement Monday to remind federal employees the G Fund -- which invests in government securities -- is protected under the “make-whole” provision of the 1987 TSP Investment Act, meaning the fund’s investors are fully protected and its earnings are fully guaranteed by the federal government.
Treasury Secretary Timothy Geithner recently said in a letter to Congress he may direct his agency to “suspend the daily reinvestment” of securities held by the G Fund as part of “extraordinary measures” to give the United States more time before it defaults on its debts.
The Government Accountability Office confirmed in a July report the G Fund is ultimately unaffected by temporary investment suspensions.
Susan Crowder, acting chief financial officer of the Federal Retirement Thrift Investment Board, recently said it will be “business as usual” for the G Fund, should Treasury hit its borrowing limit.