G-Fund under attack......

[Valkyrie]

House GOP budget targets TSP's G-Fund - FederalNewsRadio.com

"It would drop the interest to virtually zero, which would make the G Fund worthless to our participants. It wouldn't even begin to keep pace with inflation," said Kim Weaver, the board's director of external affairs. She plans to contact Rep. Jason Chaffetz (R-Utah), who chairs the Oversight Committee.

she said. "Our mission is to operate in the sole interest of the participants and to change the G Fund rate is not in their interest."

well that is a lie!

 

[BichonFreeze]

Just read the article; was hoping to see a conversation on it here. I find it hard to believe this would ever get any traction; though it worries me that this is a proposal.

 

[James48843]

What really ought to make people boil is this-

For as long as the G-Fund has been in existance, the majority of investors put a lot of money into it, and left it there. It's been basically in a 'building" status since inception- and rarely has there been large sums transferred out of the "G" fund.

Until the year 2002- , the TSP Board tied the G-Fund return to the 30-year government security Treasury Bond. Yes, technically people could move money out of "G", but they didn't. And the interest rate paid out on the G-Fund was basically a mirror of the 30-year bond rate overall.


SHortly after the Trteasury suspended 30--year bonds for public sale in 2002- the TSP leadership CHANGED the tie of the G-fund. When the Treasury stopped offering 30 year treasury notes, the TSP board looked at the fund, and decided that since technically people COULD move money ouf of "G" and into other investments, that they would, instead, tie the rate to a much shorter term note.

As a result, the interest rate earned by the G-fund is now LESS than the rate earned by the 30-year bond (which became available again in 2006).


In the 1980's, the G fund was returing 8% +


In the 1990's the G fund was returing 6-8%

In the early 2000's, it dropped to around 4.5% ( becaus eof the change from the 30 year to the 10-year tie).


And now, it's only about 2.25%.


But apparently, for the G.O.P.- that 2% is just too much to have little peons like us earn.

Thanks, all you G.O.P'er's for voting to cut every single opportunity for workers.


You know, the G.O.P. loves to use OUR MONEY when they refuse to raise the debt ceiling, and them tapping our retirement money is the only thing that is keeping the federal government from going bankrupt. But they are too cheap to even pay 2% interest on their use of our money.

I think we really ought to scare them, and move ALL of our money from the "G" fund, out to the "I" fund- offshore- and see how they like that for a day.

 

[Intrepid_Timer]

We are probably "lucky" to be earning anything in the G fund at this point. For folks outside of TSP, the only real safe option outside of bonds or equities in their retirement accounts are money market funds because you can't just sit in cash. What most of them don't realize is that they are now losing money when they sit in those money market funds. Also, if the financial institute ever collapses, they can kiss that money goodbye as well because they aren't guaranteed. Below are the returns for the funds available in my fiancee's 401K. The money market fund has had a negative return for the last several years.

 

[Warrenlm]

Even though the language is a mere suggestion, it worries the Federal Retirement Thrift Investment Board, which operates the TSP.

Now about important stuff, don't take away my semi-annual COLA plus 1% kicker. Oh..they did?

 

[BichonFreeze]

James,

Very informative for someone like me who has been with the government less than five years. Its hard for me to believe there was a time you could put your money in the G fund for no risk and just make 8% off of it; but when you look at interest rates back then it isn't as shocking. Still though....it's not hard to see how people became 'TSP Millionaires' with unlimited IFT's and G-fund returns like that.

 

[Frixxxx]

James,

Very informative for someone like me who has been with the government less than five years. Its hard for me to believe there was a time you could put your money in the G fund for no risk and just make 8% off of it; but when you look at interest rates back then it isn't as shocking. Still though....it's not hard to see how people became 'TSP Millionaires' with unlimited IFT's and G-fund returns like that.

Just remember, they had a few hundred thousand people they needed to sell on the new retirement plan FERS. So the true question is why they now tie the securities to a lower performing index? Never trust the government when they say, "Hey, I got this really new cool retirement to interest you!"

 

[Boghie]

If we refused to hold the G Fund - and Social Security had the option to buy something else - then no politician could set the return.

But, then again, we were all frightened when offered the option to purchase other financial instruments inside our Social Security account. Folks, guaranteed returns are no returns...

 

[Shamus13]

Well, 0.01% is better than a negative, I guess. Fellow coworkers that started when I did have been in G since day 1! If this goes into effect they will be going nowhere even faster.

And there is the lovely thought that the Gov't borrows from G and stops contributions to G when the going gets tough. Everyone is nervous of losing money when a financial institute collapses but what happens when the U.S.A. collapses.... time to start restocking the Doomsday Bunker!

 

[FireWeatherMet]

House GOP budget targets TSP's G-Fund - FederalNewsRadio.com

"It would drop the interest to virtually zero, which would make the G Fund worthless to our participants. It wouldn't even begin to keep pace with inflation," said Kim Weaver, the board's director of external affairs. She plans to contact Rep. Jason Chaffetz (R-Utah), who chairs the Oversight Committee.

she said. "Our mission is to operate in the sole interest of the participants and to change the G Fund rate is not in their interest."

well that is a lie!

G Fund’s return would drop to nearly zero under House plan - The Washington Post

Luckily, this G fund budget item will not have a 2/3rds majority and will hopefully be vetoed..as will the House proposed 5% increase in pension contributions.

But that can all change in early 2017.

 

[Stoplight]

...and THIS is another reason why I rolled the majority of my TSP into a self-directed IRA when I retired !!! Yes, I'll tolerate the higher fees...

Politicians...keep your hands off the employee's TSP money !!!


Stoplight...

 

[Dutchy]

FireWeatherMet....

G Fund’s return would drop to nearly zero under House plan - The Washington Post

Luckily, this G fund budget item will not have a 2/3rds majority and will hopefully be vetoed..as will the House proposed 5% increase in pension contributions.

But that can all change in early 2017.

Thanks for posting!! Always good to keep on top of this issue...

 

[nasa1974]

I think we really ought to scare them, and move ALL of our money from the "G" fund, out to the "I" fund- offshore- and see how they like that for a day.

Didn't a large group of us do that a few years back??? It put BlackRock in a tailspin and because of it we lost our daily IFT's.

 

[nasa1974]

We are probably "lucky" to be earning anything in the G fund at this point. For folks outside of TSP, the only real safe option outside of bonds or equities in their retirement accounts are money market funds because you can't just sit in cash. What most of them don't realize is that they are now losing money when they sit in those money market funds. Also, if the financial institute ever collapses, they can kiss that money goodbye as well because they aren't guaranteed. Below are the returns for the funds available in my fiancee's 401K. The money market fund has had a negative return for the last several years.

Thanks IT. Very informative.

 

[BichonFreeze]

Didn't a large group of us do that a few years back??? It put BlackRock in a tailspin and because of it we lost our daily IFT's.

Never heard of that as the reason. Interesting.

 

[limebalz]

Detail report of what the budget entails. Basically we're screwed!!!

http://www.govexec.com/pay-benefits/2015/04/workforce-cuts-house-and-senate-budgets-one-chart/109297/