How Safe Is TSP?

[luv2read]

Emswiler also said any losses caused by a rogue trading incident would not affect the TSP, largely because BGI could voluntarily make up the losses or the TSP could sue for those losses under a 1934 securities law.
Andrew Saul, chairman of the board, suggested that TSP officials talk to BGI about guaranteeing the make-up of rogue trading losses when the agency renews its contract. "This is a thing to indemnify us," he said.

http://www.govexec.com/story_page.cfm?articleid=40761&dcn=e_gvet

NOOOOOOOOOO!

Now if you were BGI and had the option to voluntarily make up losses or get sued, which would you choose...knowing the likely outcome of devaluation and only having to pay pennies on the dollar in a settlement?

Don't you just love how the Board get laws passed relieving them of all responsibility and accountability, but they suggest they talk to the contractor about a guarantee on contract renewal!!! How about it's put into the contract as a requirement of renewal? What "contract specialist" wrote this piece of....contract.

 

[CountryBoy]

With all the under handed dealing that went on between the TSP Board and barclays, I have a feeling that we are being set up for some bad news.

I don't trust Long and his band of idiots. We'll be left out in the cold like Bear Stearns people.

CB

 

[Guest2]

With all the under handed dealing that went on between the TSP Board and barclays, I have a feeling that we are being set up for some bad news. :suspicious:

I don't trust Long and his band of idiots. We'll be left out in the cold like Bear Stearns people.:worried: CB

CB, rest easy my Rawhide wearing friend. As much as I distrust both,
I still believe the powers above have their own TSP Accounts to worry
about and they are only insured up to $250,000. So in essense, they
probably have a heck of alot more to lose then we probably do. If I'm
proven wrong, you can take the lead when we form that posse! Clint
Eastwood once said; "when you hang a man, you better look at him
straight in the eye" (Hang'm High) I'll be on their shoulder for added
weight, just to ensure their eyeballs pop out of their sockets !

 

[luv2read]

SB,

I really doubt that those "powers" are concerned about their TSP accounts, if they were, the IFT rule would never have made it off the table and into the FR. TSP is probably .0000001 of the net worth of their retirement money, you know they have privated accounts socked away. Kind of like CSRS folks who voluntarily contribute...iTSP is nice to have, but not a necessity. Keep in mind too that not all of them are FERS, some of them are still CSRS....

 

[CountryBoy]

CB, rest easy my Rawhide wearing friend. As much as I distrust both,
I still believe the powers above have their own TSP Accounts to worry
about and they are only insured up to $250,000. So in essense, they
probably have a heck of alot more to lose then we probably do. If I'm
proven wrong, you can take the lead when we form that posse! Clint
Eastwood once said; "when you hang a man, you better look at him
straight in the eye" (Hang'm High) I'll be on their shoulder for added
weight, just to ensure their eyeballs pop out of their sockets !

Thanks for the words of comfort squalebear and I'm glad you'll be there when it comes time to hang'em high :nuts:, but being within single digits of retiring, I'm sitting on more than $250K, so is the $250 K our upper limit of protection? Kinda like the FDIC $100K limit?

You would think that the higher powers would worry about their own, but I'm come to the conclusion that most of our upper powers are B-teamers at best.

Thanks,
CB

 

[luv2read]

Thanks for the words of comfort squalebear and I'm glad you'll be there when it comes time to hang'em high :nuts:, but being within single digits of retiring, I'm sitting on more than $250K, so is the $250 K our upper limit of protection? Kinda like the FDIC $100K limit?

You would think that the higher powers would worry about their own, but I'm come to the conclusion that most of our upper powers are B-teamers at best.

Thanks,
CB

Trust funds are fully insured, there is no limit. At least that's what the TSP handbook says.

 

[luv2read]

Oops, time lapsed while I had the window open. To finish that thought:

"TSP funds are held under a true trust arrangement," said Thomas Emswiler, general counsel for the TSP. "Even if BGI were to experience financial difficulty, TSP funds would be safe."

According to the law governing federal trust funds such as SS, TSP, RRT, etc., they are fully insured against losses by "the full faith and credit...". That's one reason Congress can borrow them, they have to make good on the borrowing/interest/losses. However, there is no mention of that caveat about the TSP fund manager voluntarily making up losses or getting sued under the 1934 Securities Act. So is TSP safe or not? From the noise Saul is making, I would have to say NOT. And as far as recovering any losses by suing BGI and/or FRTIB, take a look at Cobell vs Norton (DOI Indian Trust Fund case). 10 years now and no end in sight.

The more I find out about this arrangement, the more I'm deciding to transfer everything out of TSP at the earliest opportunity. At least private pension plans are insured against losses by the PBGC.

 

[CountryBoy]

Oops, time lapsed while I had the window open. To finish that thought:

"TSP funds are held under a true trust arrangement," said Thomas Emswiler, general counsel for the TSP. "Even if BGI were to experience financial difficulty, TSP funds would be safe."

According to the law governing federal trust funds such as SS, TSP, RRT, etc., they are fully insured against losses by "the full faith and credit...". That's one reason Congress can borrow them, they have to make good on the borrowing/interest/losses. However, there is no mention of that caveat about the TSP fund manager voluntarily making up losses or getting sued under the 1934 Securities Act. So is TSP safe or not? From the noise Saul is making, I would have to say NOT. And as far as recovering any losses by suing BGI and/or FRTIB, take a look at Cobell vs Norton (DOI Indian Trust Fund case). 10 years now and no end in sight.

The more I find out about this arrangement, the more I'm deciding to transfer everything out of TSP at the earliest opportunity. At least private pension plans are insured against losses by the PBGC.

I agree l2r,

I'd love the chance to transfer some, if not all, of my funds out of TSP, I'm just unsure how and taking a big tax hit, etc. Our funds aren't any safer than lets say ... Enron's funds were. If there is a way to steal them, then some greedy SOB will do it.

CB

 

[Wrngway]

PBGC is far from good insurance. My father had retired from United Airlines. Once PBGC took over, the payments were cut almost in half.

 

[luv2read]

PBGC is far from good insurance. My father had retired from United Airlines. Once PBGC took over, the payments were cut almost in half.

But at least there was some guarantee...TSP has none. When I have more time, I'll look up ERISA and the other laws that created FERS and TSP again, and see exactly what they say about losses. I'll post here.

 

[Guest2]

Thanks L2R and CountryBoy. ! My retirement eligablity comes in 1 Year
346 days (but whose counting). Affordability is a different matter. That
appears to be at Mandatory Retirement Age for Law Enforcement. (2015)

I know there's been posts about 72t's and IRA in other threads, but I'm
not that well read about the topic. The reason I bring it up is the Tax
Avoidance issue and ways to transfer funds out of the TSP. Maybe by
doing a search on TSPtalk will bring up some of the info. http://72t.net
is also a link I recall. Food for thought and I hope it helps !

 

[luv2read]

SB, see this thread. It will make you :suspicious::worried:

http://www.tsptalk.com/mb/showpost.php?p=176492&postcount=1

 

[Guest2]

Maybe its not relavent after more then a year later ?

 

[luv2read]

Maybe its not relavent after more then a year later ?

It's more relevant now with more of us closer to retirement. It hasn't been updated, the justifications for the options are still valid, and they're all still on the table.

 

[Show-me]

My reply to the story.

The government can not guarantee anything. They are over extended and using deficit spending. There is no gold in Ft. Knox to guarantee our money. We possible could sell Alaska back to the Russians to raise capital. FRTIB raped me of my ability to make money in my TSP by limiting transfers and now they are sitting on their butts believing in the good faith of BGI. Who do they work for, BGI or me? Get it in writing! Let's see, BGI is in the business to make money or cut loses, not to do the "right thing". Allow all participants to transfer TSP account to any holder regardless of age, like a brokerage account, and let us manage our own money. Put 5% in TSP for the match, fully fund Roth, and hide the rest from the government. The other Mike Posted August 19, 2008 5:24 PM

 

[Guest2]

The government can not guarantee anything. They are over extended and using deficit spending. There is no gold in Ft. Knox to guarantee our money. We possible could sell Alaska back to the Russians to raise capital. FRTIB raped me of my ability to make money in my TSP by limiting transfers and now they are sitting on their butts believing in the good faith of BGI. Who do they work for, BGI or me? Get it in writing! Let's see, BGI is in the business to make money or cut loses, not to do the "right thing". Allow all participants to transfer TSP account to any holder regardless of age, like a brokerage account, and let us manage our own money. Put 5% in TSP for the match, fully fund Roth, and hide the rest from the government. The other Mike Posted August 19, 2008 5:24 PM .

You echo my sediments Show. You put the feeling of most into words
like no other. I don't think pulling my money out of the TSP is right for
me. Although I'd like to. A Roth would kill me in Taxes and my matress
is full of water and doesn't easily hide too much money (waterbed).

Maybe I'm just too scared to touch my retirement out of fear that I'll
mess it up somehow. Especially at this late stage of the game.

 

[Guest2]

It's more relevant now with more of us closer to retirement. It hasn't been updated, the justifications for the options are still valid, and they're all still on the table.

I didn't know that, thanks ! Someone is always trying to find a way to fix
something that wasn't broke to begin with. Down right depressing, I'd say !

 

[CountryBoy]

My reply to the story.

A big Amen on that brother,

CB

 

[James48843]

Any discussion about the safety of the TSP has to include a discussion of the key vendors to TSP.

As you may recall, a number of fuctions of the TSP were moved away from government employees, to outside contractors over the last few years. (Thank you G.W. (NOT!!) )


Here are the list of key contractors-from the last Meeting Minutes of the FTRIB:
http://www.frtib.gov/pdf/minutes/MM-2008Jul-Att3.pdf

Of course, we all know about Barclays-

But here are other key players:

SI International-

SI International (SI) is the prime contractor for operating both FRTIB data
centers, operating and maintaining the TSP record keeping system, providing incoming mail, data entry and imaging support, and operating the Clintwood Call Center. SI also administers the accounting, court ordered payments, death benefits, and payroll office liaison functions. SI relies on subcontracting support as follows: Jacob and Sundstrum, Inc. for systems programming support; Switch​

​

& Data for our Reston VA Data Center space; Sungard Workflow Solutions for some TSP record keeping support, and Sungard EXP for incoming mail, data entry and imaging​

support.



News this week:

http://www.bizjournals.com/washington/stories/2008/08/25/daily29.html?ana=from_rss

Wednesday, August 27, 2008 - 9:37 AM EDT
SI International sold for $511M


Washington Business Journal - by Tucker Echols Staff Reporter


SI International Inc., which gets virtually all of its business from the federal government, has agreed to be acquired by a British contractor.

Serco Inc., the U.S. division of London-based Serco Group plc, has agreed to acquire Reston-based SI International for $32 per share in cash, or approximately $423 million. Serco will also assume SI International's debt of approximately $87 million making the total value of the deal approximately $511 million.

Federal government contract revenue represented 99 percent of SI International’s second quarter revenue of $118.8 million. SI International has 4,500 employees, nearly 80 percent who hold security clearances. Its IT clients include the U.S. Air Force, Army, Department of Defense, and 15 major federal civilian agencies, including the Department of Homeland Security.

Serco Group plc, with $6 billion in annual revenue, is a management services company with military, government and commercial customers. The North American unit, Serco Inc., is based in Reston, VA, providing a variety of services to federal, state and local government and commercial customers.

Serco and SI International would have had combined revenue of approximately $1.3 billion in 2007 and 11,500 employees serving government clients. The transaction is expected to close by the end of 2008, subject to a vote of SI International's shareholders and regulatory approvals.

"We have had a tremendous track record during our ten-year history and are very proud of the leading position we have achieved in the government services sector,” said Brad Antle, president and CEO of SI International. “Now is the right time to go to the next level so the services we provide to our customers are enhanced by the scale and global reach that Serco can offer."

The per share price represents a premium of 40 percent over SI International closing stock price on Tuesday, August 26. In early Wednesday trading, SI International shares (NASDAQ: SINT) rose $8.11 to $31.00.

 

[James48843]

Note: SI Internationals buyer, the SERCO GROUP PLC, is a London based company, has it's report here:

http://www.serco.com/Images/interims2008report_tcm3-28285.pdf