Senate Eyes TSP G Fund Changes as Highway Bill Pay-For
Ahead of the fast-approaching August recess, Congress is scrambling to find money for a multi-year surface transportation reauthorization.
Federal employees and retirees may be on the hook for another congressional pay-for, with the Senate considering a proposal to reduce the rate of return on the Thrift Savings Plan (TSP) G Fund in order to put approximately $30 billion in savings towards a multi-year highway funding deal.
With the Highway Trust Fund expected to become insolvent in a matter of weeks, according to the Department of Transportation (DOT), Congress is mulling short and long term options for keeping money flowing to transportation projects around the nation that would be stalled without it.
Last week Senate Finance Committee Chairman Orrin Hatch (R-UT) said of the G Fund proposal, “we think it’s an ingenious way helping to pay for this.”
Some Senate Democrats have balked at the inclusion of the G Fund proposal in the highway funding debate, while others appear to be leaving all options on the table.
The Federal Retirement Thrift Investment Board (FRTIB), which manages the TSP, is pushing back on the proposed changes to the G Fund interest rate, issuing two statements (G Fund Irreplaceable for TSP Participants; Oppose Any Change to G Fund Interest Rate) in June in opposition.
The Employee Thrift Advisory Council (ETAC), a statutorily created Advisory Committee comprising representatives of employee organizations, unions, and the uniformed services that advises the FRTIB on investment and administrative matters related to the TSP, also conveyed its perspective in a letter to the Senate.
“ETAC wishes to condemn such a funding scheme in the strongest possible terms since it would unfairly tax the savings and reduce the retirement income of seniors, soldiers and ordinary workers employed by the federal government,” wrote ETAC Vice Chairman James Sauber. “There is no justification for reducing the interest rate payable on the G Fund. This proposal should be rejected by Congress all together, not just as it relates to inclusion in the highway bill.”
Amidst Senate negotiations on the highway funding proposal, federal employee groups are also mobilizing to fight the proposal.
“Should the modest retirement benefits of federal civilian employees and uniformed military personnel and retirees be substantially reduced, to the tune of $32 billion, to fund a highway bill,” asked the Federal-Postal Coalition (FPC), whose members include nearly 30 federal and postal labor and management employee organizations, in a letter to the Senate.
“Absolutely not,” the Federal-Postal Coalition letter continued. “Make no mistake: Every nickel redirected from the rate of return on the TSP G Fund to finance the highway bill would be money out of the pocket of a retired federal employee or veteran.”
“Federal employees have already contributed over $159 billion to deficit reduction,” said Colleen Kelley, National President of the National Treasury Employees Union (NTEU), in a letter to the Senate. “Federal employee and military personnel benefits cannot continue to be used as the source to finance non-related government programs and operations.”
“At a time when federal employees, retirees, job seekers and their families are reeling from news that their most personal information and financial data have been compromised, it is unconscionable that this very constituency would be targeted for cuts to pay for completely unrelated legislation,” wrote Richard Thissen, president of the National Active and Retired Federal Employees Association (NARFE), in a separate letter to the Senate.
Federal employees and retirees are not alone in protesting the proposed G Fund changes – military service members and veterans also participate in the program.
Navy Vice Adm. Norb Ryan, president and CEO of the Military Officers Association of America (MOAA) reminded Senate Leaders Mitch McConnell (R-KY) and Harry Reid (D-NV) in a letter that “Thrift Savings Plans are not just limited to federal employees. Since 2002, men in women in uniform have been able to participate in TSP… Raiding TSP accounts to fund federal programs sets a dangerous precedent… TSP accounts belong to plan participants and should not be subject to government intervention.”
Posted in From the Hill