Sen. Ben Cardin, D-Md., speaking at an event in March.

Sen. Ben Cardin, D-Md., speaking at an event in March. Cliff Owen/Associated Press

Congress Doesn’t Have Appetite For Messing with the G Fund, Senator Says

A proposal to limit the return rate on the TSP’s most stable offering is unlikely, according to Maryland Democrat.

A House proposal to limit the rate of return on the Thrift Savings Plan’s government securities fund to help reduce the deficit is unlikely to become reality, according to one Democratic senator.

“I think we are going to be very reluctant to fool around with the Thrift Savings option,” said Sen. Ben Cardin of Maryland, in response to a question during a recent town hall with federal employees and contractors at the National Institutes of Health. “I don’t think you are going to find any interest in adjusting those returns.”

The House Budget Committee’s fiscal 2016 blueprint targets federal retirement benefits, among several other areas, for more than $280 billion in budget savings over the next 10 years. Those recommendations include aligning the G Fund “with an appropriate risk profile,” according to the committee report on the concurrent resolution, which the House passed on March 25. The Senate has also passed its budget blueprint, which does not include a provision affecting the G Fund. The president does not sign budget resolutions, so they do not become law, but rather provide a framework for the two chambers as they craft budget priorities for the upcoming fiscal year. The House and Senate are working to incorporate their different versions into a single blueprint this spring.

The G Fund is the TSP’s most stable offering, and it is not subject to risk of default. “Payment of principal and interest is guaranteed by the U.S. government. Yet the interest rate paid is equivalent to a long-term bond,” the House budget resolution said. “As a result, those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security.” The resolution estimated that curbing the rate of return on the G Fund could save up to $32 billion over the next decade.

The Federal Retirement Thrift Investment Board “strongly opposes this change,” said Kim Weaver, the board’s director of external affairs, in an email. The change would affect the calculation of the interest rate for the G Fund, essentially basing it on a three-month, rather than a four-year, average. Weaver said the proposal would cause the interest rate payable on the G Fund to drop to 0.01 percent, making it “virtually worthless” for TSP participants since it would not keep pace with inflation. Of the $436.8 billion invested in the TSP as of Jan. 31, $191 billion is invested in the G Fund; of the approximately 4.7 million TSP participants, more than 4.3 million participants have all or some of their account balance invested in the G Fund, according to the board’s data.

The interest on Treasury securities in the TSP’s G Fund is calculated using the same formula as the securities issued to Social Security’s Old-Age, Survivors, and Disability Insurance Trust Funds, Weaver pointed out. “This means every American contributing to Social Security is benefiting from the same investment formulas as is available in the G Fund.”

Weaver said the board has shared its concerns with lawmakers. The board will respond in “several ways,” according to Weaver, if the G Fund proposal is enacted, including asking Congress to allow a new TSP offering since the G Fund acts as a “money market fund, a stable value fund and an inflation-protected securities fund.”

Cardin said ultimately lawmakers have little appetite for tinkering with the TSP’s most stable offering. “We want to offer fair opportunities for our federal workforce, and therefore we don’t want to overly discriminate against the options that you pick,” he told the NIH audience. “So I don’t think it’s going to happen.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.