The board that runs federal employees’ Thrift Savings Plan is again offering hope for those worried that a default could sap away the money they’ve saved in the G Fund.
In May, Treasury Secretary Tim Geithner stopped issuing securities to the Thrift Savings Plan’s G Fund to help the government pay its bills.
But Greg Long, the executive director of the Federal Retirement Thrift Investment Board, testified before the House subcommittee on the federal workforce yesterday and offered reassurances that even if the debt ceiling isn’t raised by the Aug. 2 deadline, the interest which would accrue if the fund were fully invested would still be credited.
That’s because of a 1987 measure, known as the “make-whole” provision, contained in the legislation that actually created the TSP, Long told the committee. There was a debt crisis back then as well, he said. “And to ensure G Fund investments, the board – my predecessors – formally requested legislation guaranteeing G Fund earnings,” he said.
The make-whole provision is designed to protect investors even when securities are not issued, he added.
“Whether [securities] are issued, or whether they’re not issued, G Fund investors are protected,” Long said, “and that’s the message that we have tried to deliver.”