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

Ups and Downs


May was not a calm month for investors, and Thrift Savings Plan enrollees were not exempt from the chaos of a volatile international market and a mysterious one-day 1,000-point drop.

Federal Retirement Thrift Investment Board Chief Investment Officer Tracey Ray called May the "worst month we've had in a long time," citing the volatility of international markets in particular. The C Fund dropped 8 percent in May, and the S Fund fell about 7.5 percent.

The I Fund, the international stock index investment fund, bore the brunt of the freefall, with an 11 percent dip in response to the unsteady foreign markets. The board warns investors that while the I Fund offers the opportunity to earn a potentially high investment return over the long term, "there is a risk of loss if the [Morgan Stanley Capital International Europe, Australasia, Far East] Index declines in response to changes in overall economic conditions (market risk) or in response to increases in the value of the U.S. dollar (currency risk)."

In response to market volatility, the TSP saw participants "fly" to the relative security of the G Fund, said Renee Wilder, director of research and strategic planning. TSP investors transferred $3.2 billion to the G Fund, which allows participants to earn rates similar to those of long-term government securities without risking principle loss or earnings volatility.

The board noted, "The objective of the G Fund is to maintain a higher return than inflation without exposing the fund to risk of default or changes in market prices."

Ray said June already is proving to be a better month than May for TSP participants.

Members of the Board

It's been a busy week for the Federal Retirement Thrift Investment Board: after holding its monthly meeting on Monday, the Senate confirmed two new board members on Tuesday. Dana Katherine Bilyeu and Michael D. Kennedy were part of a group of 64 administration nominees confirmed after a dispute over National Labor Relations Board nominees was resolved.

Bilyeu has served as the executive officer of the Public Employees' Retirement System of Nevada since 2003. In that role, she was responsible for all aspects of fund management, including analysis of plan funding, investment oversight, operational and strategic planning.

Kennedy is a senior client partner at Korn/Ferry International, an executive recruiting firm, and a member of its global financial services practices in Atlanta. Kennedy previously founded the private equity advisory firm Venture South and before that held vice president positions at GE Capital Corp. and Wachovia Corp.'s U.S. Corporate Finance Group.

Family Matters

On Wednesday, the Labor Department announced a major reinterpretation of the 1993 Family and Medical Leave Act, which will extend leave rights to "nontraditional families."

Under the law, workers at large employers -- including the federal government -- can take up to 12 weeks of unpaid leave annually to care for loved ones or themselves. In what the department called a "clarification," Nancy J. Leppink, deputy administrator of Labor's wage and hour division, said these rights extend to the various parenting relationships existing in today's world.

The reinterpretation means an uncle caring for his niece and nephew while their single parent is deployed on military duty could exercise his right to unpaid family leave, as can a grandmother who has assumed responsibility for her sick grandchild. Perhaps most controversially, the extension means an employee who plans to help rear a child with a same-sex partner will be able to take family leave for the birth or adoption of that child.

"No one who loves and nurtures a child day-in and day-out should be unable to care for that child when he or she falls ill," said Labor Secretary Hilda L. Solis. "No one who steps in to parent a child when that child's biological parents are absent or incapacitated should be denied leave by an employer, because he or she is not the legal guardian. No one who intends to raise a child should be denied the opportunity to be present when that child is born simply because the state or an employer fails to recognize his or her relationship with the biological parent. These are just a few of many possible scenarios. The Labor Department's action today sends a clear message to workers and employers alike: All families, including [lesbian, gay, bisexual and transgender] families, are protected by the FMLA."

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