The National Treasury Employees Union, the Employee Thrift Advisory Council and 13 other organizations urged Congress not to use the Thrift Savings Plan — the federal government’s retirement savings program — as a revenue source.
In a letter to House and Senate leadership, Clifford Dailing, the chairman of ETAC, said recent proposals to change the rate of returns for the TSP’s G Fund are “worrisome to millions of federal employees and retirees” who were assured it wouldn’t be “subjected to political manipulation.”
“Just the suggestion of a change to the TSP indicates to employees … that the TSP is no longer a secure place to put their retirement money,” Dailing wrote. “When Congress considers changes to the TSP opposed by the TSP fiduciaries, employee confidence in the fund is shaken.”
NTEU and other members of the ETAC represent about 4.9 million TSP account holders, including both federal and Postal Service workers, 293,000 members of the uniformed services and thousands of retirees.
In a statement Wednesday, NTEU National President Tony Reardon said talk “that even hints” at changing how the funds are used “sends an unwelcome message” for TSP being an unsafe retirement option.
“Federal employees and retirees have long been promised that Congress will not siphon money away from the TSP for other government programs,” he said. “Tapping the personal retirement savings of federal employees, retirees and members of the military to offset spending is simply unacceptable.”
The Federal Thrift Investment Board, which manages the TSP, opposes the proposals based on a 1989 agreement between Congress and the Office of Management and Budget declaring the TSP would not be considered part of the federal budget.
In the letter, Dailing said changes to the TSP could be devastating to federal employees, and directly affect retired military personnel.
“For some in the military, it may be their only retirement savings during their service years. Without it, most will not have sufficient retirement income,” he wrote.
Dailing wrote that the organizations aren’t suggesting Congress has no right to make changes to the TSP, but should consider that it is an important part of the retirement system for federal employees.
“Congress has to declare the TSP off-limits as a source of revenue,” he wrote. “It is the only way we can convince our members — federal employees and retirees, as well as members of the uniformed services — to continue to invest in the fund for the future.”
NTEU, ETAC and other organizations’ concerns about how Congress views the TSP are not unfounded.
The Senate in July rejected the House’s idea to pay for transportation infrastructure upgrades in part by changing how the Thrift Savings Plan calculates the average interest rate of the G-Fund.
The House budget proposal for fiscal 2016 criticized the G Fund back in March. Republican lawmakers suggested basing the G Fund’s interest rate on a three-month average rather than the current four-year average. It estimates the change would save up to $32 billion over 10 years.