TSP Weighs Its Supermodel Retirement Status, and More
A weekly roundup of pay and benefits news.
The board that runs the Thrift Savings Plan, the federal government’s 401(k)-style retirement program, is anxiously eyeing a new bill that uses the TSP as a model for a national retirement savings plan for millions of American workers.
The legislation, sponsored by Sen. Jeff Merkley, D-Ore., would give workers without access to an employer-sponsored retirement savings account “the ability to save for retirement through their own, personal retirement savings account modeled on the same high-quality retirement savings plan already used by federal workers and members of Congress,” according to a Merkley press release.
A provision in the legislation requires the executive director as well as three members of the Federal Retirement Thrift Investment Board to sit on the board that would oversee Merkley’s American Savings Account. Kim Weaver, FRTIB director of external affairs, said the provision has them nervous because “obviously we take our fiduciary status and responsibilities quite seriously, and to have our executive director have a split duty to both the TSP participants and these other people is concerning.”
Weaver said she wasn’t sure if there would be a conflict of interest, but “I think it’s impossible to say that there wouldn’t be.” For instance, BlackRock, the company that manages several of the TSP’s funds, could potentially bid to manage new funds in a national American Savings Account. “Would that create a conflict of interest? I don’t know,” said Weaver. “It’s way too early to say, but that’s the kind of stuff that we wouldn’t even want to have to worry about.”
The TSP has approximately 4.7 million participants, including lawmakers and military service members. This isn’t the first time leaders have looked to the TSP for ideas on how to provide retirement security to more Americans. GOP presidential hopeful Sen. Marco Rubio of Florida proposed allowing all Americans access to the TSP in 2014, but the bill didn’t gain traction. The plan was similar to one proposed by President Obama in his 2014 State of the Union address, which suggested giving all Americans access to the TSP’s government securities (G) fund. In late 2015, the Obama administration rolled out the MyRA (Retirement Account) program with the aim of helping more workers save for retirement.
Of any potential TSP role in these ideas, Weaver said, “What people miss is, we are an employer benefit. We’re not in existence for any other reason than to provide federal employees with a retirement benefit that they get because they are federal employees. And that’s what we are designed to do, and we do it well.” That mission becomes more complicated when the TSP becomes available to everyone, Weaver said. “Once you open it up to all Americans, that focus gets lost, and the ability to keep our costs low completely goes out the window.”
Weaver said Merkley’s office reached out to the board last fall for input on draft legislation, and the TSP board shared its concerns. She said it’s a “safe bet” that the issue will come up during the board’s next public meeting on Feb. 22.
Merkley spokeswoman Martina McLennan said the “TSP’s independence and fiduciary responsibilities to federal employees are precisely the qualities that make TSP’s board members a natural fit to serve under the ASA.” She said the bill “was designed to balance and utilize the experience and benefits of the TSP, while addressing the needs of ASA participants. As a minority of the ASA board, TSP board members would be a voice at the table able to bring their expertise to bear in setting up a similar system to bring working Americans the same sensible investment options and rock-bottom fees that are available to federal employees through TSP.”
Another Democratic-sponsored bill coming down the pike in the House is getting a lot of attention. Virginia Rep. Gerry Connolly soon will introduce legislation to give federal employees an across-the-board salary bump of 5.3 percent. The Federal Adjustment of Incomes Rate Act would more than triple President Obama’s proposed 1.6 percent raise. Connolly last year sponsored a similar bill, which would have given federal workers a 3.8 percent raise in 2016. “While the president's proposal marks a slight improvement over this year, it doesn’t come close to restoring what federal employees have lost over the past six years, including enduring pay freezes and a shutdown, or to reflecting what they are owed based on their quality of service,” Connolly said of his new measure. “The FAIR Act demonstrates to our federal workforce that we value their service.”
Democrats aren’t the only ones who’ve got federal employees’ compensation on their minds these days. Bipartisan legislation, sponsored by Sen. Rand Paul, R-Ky., that would allow agencies to give bonuses of up to $10,000 to federal employees who save the government money, is gaining momentum. The Senate Homeland Security and Governmental Affairs Committee will mark up the Bonuses for Cost-Cutters Act during the panel’s next meeting in March. Paul’s bill, which has 10 co-sponsors including Virginia Democrat Mark Warner, would allow an agency inspector general to pay an award of up to $10,000 to a federal employee who identifies waste. Paul introduced the legislation last May.
On the management front, the Office of Personnel Management has provided guidance to agencies on creating a framework for on-boarding new senior executives. The on-boarding should ideally last one year, according to OPM, and typically should include a detailed checklist for each phase. Eric Katz reports that the full onboarding process will have the following steps:
- First week: Processing the employees, with senior leaders welcoming them to the agency
- First 30 days: Informing the employees of their roles and responsibilities
- First 90 days: Build employees' on-the-job competence and provide early feedback
- Six-to-nine months: Provide additional feedback and make plans for employees’ futures
- One year: Continue to monitor development while discussing the employees’ goals and desires
The program is designed to help new top career leaders understand their organization’s culture as well as their own performance expectations. It also aims to provide new senior executives with access to influential networks and support from their bosses.
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