Market Meltdown Meets Tsunami

For years (make that decades) now, nervous government officials have warned of a brain drain from the federal government. Of a retirement “tsunami” tidal wave that would sweep federal agencies of their best, brightest and most experienced people.

But is it possible that the current stock market crisis will have the same impact on the brain drain that an iceberg had on the Titanic?

If talks with long-time, retirement-age feds mean anything, the answer is: probably!

I checked in yesterday with a top career federal official who is a close watcher of the Thrift Savings Plan. Like the vast majority of federal and postal workers he’s investing regularly in the federal 401(k) plan and he’s seen his diversified portfolio shrink over the past year.

When I asked him if thought the stock market meltdown could slow or halt any brain drain his reply was this:

Funny that you should mention that, because yesterday (Monday) one of my top staff people came in. She had been planning to retire within the next two years but now, because her TSP account is down about $100,000 she said she doesn’t know if the can afford to retire!

He added that when he joined the government in the late 1960s there was serious talk, way back when, about a brain drain from the government. “I’m still waiting for the tidal wave,” he said.

Over the past couple of months I’ve talked with dozens of fed investors and nearly all of them say the same thing. They aren’t likely to retire if economic times are bad (even if they don’t want or plan to get another job), and especially if their TSP accounts are down.

Your Risk Level

So what do the the problems of Lehman Brothers and AIG insurance mean to TSP investors? As of September 5, 2008 Lehman’s corporate bonds made up .27 percent of the Barclay Global Investors U.S. Debt index in which the TSP’s bond-indexed F-fund is invested.

Lehman is also one of the companies that make up the S&P 500 which the C-fund tracks. It made up 0.5 percent of the BGI Equity Index Fund which tracks the S&P 500 index. Because it has filed for bankruptcy, Lehman bonds will no longer be part of the index at the end of the month and it will be dropped from the companies that make up the S & P 500.

Bottom line: While the problems have a major impact on the overall stock market, federal investors in the TSP, because of the diverse quality of the funds it offers, had only a small exposure to Lehman and AIG investments.

Fed Night At The Ballpark

Saturday is Federal Employee Appreciation Night at the Washington Nationals dynamite new ballpark. It is easy to get to by Metro and it may have the best food choices, and lowest ticket prices, in the major leagues. And it is offering discount tickets for you and yours. This is the last Saturday game of the season, so check it out. Winners of the Service to America medals will be honored in a pre-game show. To get your discounted tickets, click here.

New NARFE Team

Nathaniel Brown has been reelected National Secretary of the National Association of Active and Retired Federal Employees. He won a second term at NARFE’s Louisville convention last week. Joseph A. Beaudoin of Winchester, Va., was elected National Vice President. As first reported here last week, delegates unanimously reelected Margaret Baptiste to a second term. For more news about NARFE click here.

Nearly Useless Factoid

All porcupines float in water.

To reach me: mcausey@federalnewsradio.com

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