The Govt is monkeying with our savings again

[James48843]

It's in Title 5 USC Section 8438, which states, in part:

(g)(1) Notwithstanding subsection (e) of this section, the
Secretary of the Treasury may suspend the issuance of additional
amounts of obligations of the United States, if such issuances
could not be made without causing the public debt of the United
States to exceed the public debt limit, as determined by the
Secretary of the Treasury.

(2) Any issuances of obligations to the Government Securities
Investment Fund which, solely by reason of the public debt limit
are not issued, shall be issued under subsection (e) by the
Secretary of the Treasury as soon as such issuances can be issued
without exceeding the public debt limit.

(3) Upon expiration of the debt issuance suspension period, the
Secretary of the Treasury shall immediately issue to the Government
Securities Investment Fund obligations under chapter 31 of title 31
that (notwithstanding subsection (e)(2) of this section) bear such
interest rates and maturity dates as are necessary to ensure that,
after such obligations are issued, the holdings of obligations of
the United States by the Government Securities Investment Fund will
replicate the obligations that would then be held by the Government
Securities Investment Fund under the procedure set forth in
paragraph (5), if the suspension of issuances under paragraph (1)
of this subsection had not occurred.

(4) On the first business day after the expiration of any debt
issuance suspension period, the Secretary of the Treasury shall pay
to the Government Securities Investment Fund, from amounts in the
general fund of the Treasury of the United States not otherwise
appropriated, an amount equal to the excess of the net amount of
interest that would have been earned by the Government Securities
Investment Fund from obligations of the United States during such
debt issuance suspension period if -

(A) amounts in the Government Securities Investment Fund that
were available for investment in obligations of the United States
and were not invested during such debt issuance suspension period
solely by reason of the public debt limit had been invested under
the procedure set forth in paragraph (5), over
(B) the net amount of interest actually earned by the
Government Securities Investment Fund from obligations of the
United States during such debt issuance suspension period.


(5) On each business day during the debt limit suspension period,
the Executive Director shall notify the Secretary of the Treasury
of the amounts, by maturity, that would have been invested or
redeemed each day had the debt issuance suspension period not
occurred.

(6) For purposes of this subsection and subsection (h) of this
section -
(A) the term "public debt limit" means the limitation imposed
by section 3101(b) of title 31; and
(B) the term "debt issuance suspension period" means any period
for which the Secretary of the Treasury determines for purposes
of this subsection that the issuance of obligations of the United
States may not be made without exceeding the public debt limit.
(h)(1) The Secretary of the Treasury shall report to Congress on
the operation and status of the Thrift Savings Fund during each
debt issuance suspension period for which the Secretary is required
to take action under paragraph (3) or (4) of subsection (g) of this
section. The report shall be submitted as soon as possible after
the expiration of such period, but not later than 30 days after the
first business day after the expiration of such period. The
Secretary shall concurrently transmit a copy of such report to the
Executive Director.
(2) Whenever the Secretary of the Treasury determines that, by
reason of the public debt limit, the Secretary will be unable to
fully comply with the requirements of subsection (e) of this
section, the Secretary shall immediately notify Congress and the
Executive Director of the determination. The notification shall be
made in writing.

 

[James48843]

By the way- if they did this in private industry,
it would be illegal and cause the plan administrator to go to jail.


Good thing we work for Uncle Sam.

 

[Afishegg]

Ok? So what does all that mean? They can take from the g fund? But more specifically, do they take "our" money ie money i have paid into, or is all that stuff just saying that they will just stop matching their contributions? Some here at work seem to think they will just stop putting in their part and that's where they'll get the money. Is this correct?

 

[James48843]

Ok? So what does all that mean?

In reality? Nothing. You'll still get your money, and it should be transparent to you.

They can take from the g fund?

Just enjoy it. Pretend like the Congress didn't write the language which allows them to create a totally separate class of government obligation note backed by nothing but air. Smile. You'll feel better.

But more specifically, do they take "our" money ie money i have paid into, or is all that stuff just saying that they will just stop matching their contributions? Some here at work seem to think they will just stop putting in their part and that's where they'll get the money. Is this correct?

The law as written says they create a whole "out of thin air" class of debt obligation, to substitute from the Treasury note (itself nothing more than a piece of paper, of course).

Don't worry.

Be happy.

All will be well.

Those aren't the droids you are looking for.


http://www.youtube.com/watch?v=5bNE-5TVAmg

 

[burrocrat]

You'll still get your money, and it should be transparent to you.

It's worth so little now, it's practically transparent already.

Maybe that explains why we'll be lucky to ever see it.

 

[FundSurfer]

They are just replacing one IOU with a different IOU. Either way, it is still an IOU. I just hope they stick to just the G-fund. If they start trying to expand to other funds, they could actually start affecting the market negatively.

 

[Myemal]

Can anyone tell me when is the last day to move my TSP money into the equity funds before Turbo Timmy starts playing fast and loose with my G fund collateral?

It started on May 6th. See the prior post.

 

[James48843]

It's official now.

We are now officially out of money.

The Treasury is now offically playing ping-pong with our retirement funds.

http://www.npr.org/blogs/thetwo-way...d-treasury-to-stop-investing-in-pension-plans

 

[hessian]

Hi James,
In all seriousness, do you think it a good idea to roll out our TSP to a brokerage - like ASAP???
I'm retired so I can't afford any "monkey business!" :suspicious:
Please provide your best asessment/guess.
(I used to think the Gov was the safest place to keep our 401k funds.)
Much Thanks
VVR!

 

[tsptalk]

From tsp.gov:

https://www.tsp.gov/whatsnew/messages/specialMessage.shtml

The Effect of the Suspension of Issuance of Treasury Securities
to the Government Securities Investment (G) Fund

Absent legislation by Congress to raise the Federal debt limit, the Secretary of the Treasury may determine that portions of the monies in the G Fund cannot be reinvested in Treasury securities because to do so would exceed the present Federal debt limit. However, all of the G Fund monies would still be on account with the Treasury, and the interest which would accrue if the G Fund were fully invested would still be credited to the G Fund.

Some published reports have mischaracterized the actions which may be taken by the Treasury, which are authorized under the law. G Fund investments are safe and will continue, by law, to accrue earnings. The integrity of the G Fund would not be compromised. TSP participants’ accounts would not be affected as a result of any suspension of issuance of Treasury securities to the G Fund.

This is possible because of the “make-whole” provision contained in the relevant section of the Thrift Savings Fund Investment Act of 1987 (P.L. 100-43), 5 U.S.C. § 8438(g)(4), covering this very situation (i.e., a suspension of Treasury securities issuance because of the debt ceiling). The make-whole provision means that TSP participants who have invested in the G Fund will not lose anything. The G Fund account balances would be exactly the same from day to day as if they were invested in Treasury securities. Furthermore, disbursements of TSP loans and withdrawals would not be delayed, nor would the amounts of those payments be reduced.

A Congressional Research Service memorandum explaining the use of Federal retirement funds during debt issuance suspension periods was issued on March 20, 2002. This report accurately describes the actions which may be taken by the Secretary of the Treasury and the complete protection of TSP participants’ G Fund accounts afforded by the make-whole provision. The General Accounting Office issued a report on August 30, 1996, (AIMD-96-130) confirming that the statutory make-whole protection (which remains in effect) was properly implemented when it was used in 1995-96.

 

[James48843]

Hi James,
In all seriousness, do you think it a good idea to roll out our TSP to a brokerage - like ASAP???
I'm retired so I can't afford any "monkey business!" :suspicious:
Please provide your best asessment/guess.
(I used to think the Gov was the safest place to keep our 401k funds.)
Much Thanks
VVR!

My honest opinion is- pretend like it isn't happening at all, because there really isn't anything you can do anyway.

It doesn't matter.

If you could convert your money instantly into gold, my answer would be different- but you can't.

You must believe in the intergrity of the U.S. dollar, and the ability of the U.S. govenrment to pay it's bills.

As Tom (and the TSP) point out- there is a "make whole" provision in the law. They can't issue you Treasury notes, but the law says they have to pretend like they are going to , and they have to pay you anyway. Period.

So there really is NO difference if they do or do not have a debt ceiling, to you and to me.

Either you believe that the U.S. govenrment will pay their bills (and the full faith and credit of the U.S. government backs up that law), or they won't. I don't care to think about what happens to our nation if they don't.

So they will. They will pay. The law says so. No sweat.

Allocate your account as you best see fit, but for me, there is NO CHANGE WHATSOEVER as to how I plan to handle my account.

Yes, it's stupid.

Yes, it would be illegal if a private sector employer was doing it.

But yes, the Congress does mess with things every once in a while. No biggie. It is what it is.

Enough said.

 

[Boghie]

Folks,

It is ONLY your 'G Fund' holdings that are at risk. And, as James states, the risk should be zero.

F/C/S/I cannot be touched by the Treasury.

The 'G Fund' portion of the Lifecycle funds can be touched.

Personally, it is starting to look like a great time to invest in the C/S/I funds. I have a bit (20%) in the 'G Fund'. I am kinda experimenting - eh. Going to wait a bit till the Treasury is deep in my pocket and move the money out of it. That way I will know if the assets are liquid. That may be important at a later date. As a side, it might be interesting if all us TSPTalk types moved our assets out of the 'G Fund' tomorrow:nuts:

 

[nnuut]

Cool down, they have done this before and had No Effect on the TSP. If by some chance it does that means the dollar is insolvent and our money would be worth nothing anyway, fat chance! You don't have to move anything.

Cool It!

 

[James48843]

If you are concerned at all, the best thing you could do is call your House of Representative Congressmen.

They are the ones who must initiate legislation.

 

[nnuut]

I think if they're going to CUT Government workers benefits, Retirement and Wages we should CUT OFF their credit line to OUR MONEY! NOW!:nuts:

 

[FAB1]

Were Doomed!!!

well maybe not but I was glad to get that off my chest. Gnite!

 

[nnuut]

They are trying to do the same thing to our Retirement Funds that they did to Social Security, use the funds for other purposes and leave just a promise to pay it back, then when it becomes insolvent increase TAXES to pay it back. Should be against the law. NO BRAINER!:nuts:

 

[hessian]

Quote:Originally Posted by nnuut
Cool down, they have done this before and had No Effect on the TSP. If by some chance it does that means the dollar is insolvent and our money would be worth nothing anyway, fat chance! You don't have to move anything.
Cool It

Thanks All,
Tom for your excellent research & reply, re: "G-fund's" stability.
James for confirming some of Tom's and adding more reassurance.
Bogie, for your reply (and I almost did make the 100% "F" trade). :laugh:
And Nnutt, and just all, for your input.
All said and done, personally, I suppose "I'm Cool" with it.
Must say though it still damages my "trust and faith" in our Gov
- something I didn't think possible after working for 17 yrs in DC!

 

[mick504]

Years ago the Feds discussed changing the retirement annuity based on the highest 3 to 5 years; thereby reducing one's annunity. After the next election...this could be a real possibility. Since I'm retired that will not affect me, however recent talk about increasing the employee's or retiree's contribution from about 7% to 12.5% for CSRS and I think about <1% to 6%m 7% or 8.75% (might have been) for FERS, sure got my attention. That's a real hit for us whether working or retired...that was apparently planned or discussed by Wisconsin Senator Paul Ryan....

 

[James48843]

Years ago the Feds discussed changing the retirement annuity based on the highest 3 to 5 years; thereby reducing one's annunity. After the next election...this could be a real possibility. Since I'm retired that will not affect me, however recent talk about increasing the employee's or retiree's contribution from about 7% to 12.5% for CSRS and I think about <1% to 6%m 7% or 8.75% (might have been) for FERS, sure got my attention. That's a real hit for us whether working or retired...that was apparently planned or discussed by Wisconsin Senator Paul Ryan....

The plan now being discussed won't wait until the next election.

They are talking now- seriously-about doing it BEFORE THE DEBT CEILING IS LIFTED. And yes, BOTH a high-five plan, and the 6% FERS deduction, are seriously being pushed by the right-wingers and being negotiated right now in D.C. as we speak.