New (R) proposals affecting TSP

[James48843]

Earlier this week, an article in Salon listed a January 7, 2025 set of proposals for reducing spending by the federal government. It was fifty pages long, and gave a large list of possible cuts.

Among the items I saw- two stick out.

1. They listed changing employee’s FERS contributions for ALL FERS employees from the current 0.8% (anyone hired before 2013) to 4.4%, the same as recently hired employees.

-AND -

2. Changing the interest rate paid out by the G fund, so that it only pays the overnight market rate, instead of the current rate which is based on longer term returns. That would basically mean the G fund would only earn 0.2% annually or so, instead if the current 4% to 6% range. This would save $47 billion over time.

Details of more cuts:

https://www.politico.com/f/?id=00000194-5115-d639-a395-7db5d6b70000

 

[nasa1974]

The new Robinhood.
Take away from those that need it and give it to those that don't.

 

[Skooby]

I hope none of this passes but I'm not so sure anymore.

 

[JTH]

Ouch, so if this passes then the G-Fund is dead money (or worse than dead).

 

[WorkFE]

The problem with changing interest rates paid out by the G fund is that it would have negative impacts on more than just the G Fund. While I personally do not dabble in Life Cycle Funds, I do see their benefits of set it and forget it. Who in their right mind would utilize them. The L Income has over 65% allocated to the G Fund, that puppy would shut down. TSP encourages folks to keep their $ in the TSP after retirement, you can forget that once they create a system that literally only has 3 options for decent potential growth.

 

[robo]

The problem with changing interest rates paid out by the G fund is that it would have negative impacts on more than just the G Fund. While I personally do not dabble in Life Cycle Funds, I do see their benefits of set it and forget it. Who in their right mind would utilize them. The L Income has over 65% allocated to the G Fund, that puppy would shut down. TSP encourages folks to keep their $ in the TSP after retirement, you can forget that once they create a system that literally only has 3 options for decent potential growth.

This is all about the cutters finding a few trillion in savings so Trump can pay for his tax cuts, and other things. More to come.... A Dome over the US and a flag on Mars sounds very expensive to me. How will they pay for it? Cuts in other places.

We shall see how it all plays out....

 

[nasa1974]

First the "G" fund next our pensions.

 

[evilanne]

You have to remember that many of these have been proposed before and never passed. CSRS never had anything reduced after FERS was introduced. I think there would be too much legal issues trying to increase rates on existing employees, the increase in contributions was only for new employees under FERS. All of these have to go through congress so you might want to reach out to your congress critters and voice your concerns if you are really concerned.
They also are pushing for early outs with increase VSIPs ($25-$40K) and being able to retire with as few as 15 years of service, rather than 20, above age 50. https://www.fedweek.com/fedweek/bud...s-retirement-health-insurance-other-benefits/
I agree with WorkFE, I never did like the L fund & there will be a lot of dollar moving out of TSP if they mess around with the G-Fund. Unfortunately, target funds seem to be the popular push now (they put you in them automatically until employee changes them) and many people just accept them and don't know enough about investments & markets.

 

[evilanne]

They are already trying to get everyone pushed into Medicare. Retired military are already required to get Part B. Last year they were pushing Medicare Part D for FEHB retirees. Recently Postal workers are now required to enroll in Part B. Seems to be a pattern emerging AI:

As of January 1, 2025, Postal Service annuitants (retirees) who are eligible for Medicare Part A are generally required to enroll in Medicare Part B to maintain coverage under the Postal Service Health Benefits (PSHB) plan, while active Postal Service employees are not required to enroll in Medicare Part B while still working; however, they will need to enroll when they retire and become eligible for Medicare Part A.

 

[nasa1974]

They are already trying to get everyone pushed into Medicare. Retired military are already required to get Part B. Last year they were pushing Medicare Part D for FEHB retirees. Recently Postal workers are now required to enroll in Part B. Seems to be a pattern emerging AI:

Yep. Budget cuts to Medicare.