The Secretary of the Treasury has suspended investments in three federal employee benefit funds – including the TSP’s G-Fund.
On Thursday, January 19th, the country’s debt ceiling was breached. In order to keep the government current on its debt obligations, the Treasury Secretary Janet Yellin initiated a series of “extraordinary measures.” One of the moves was to suspend new investments in the Thrift Savings Plan’s (TSP) G-Fund. Essentially, the government is borrowing from the G-Fund in order to avoid default. Once Congress manages to raise or suspend the debt ceiling, new investments will be allowed, and the investment fund will be “made whole“- essentially have zero impact on federal workers and retirees.
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A similar measure was applied to both the CSRS retirement and disability fund and the Postal Service Health Benefits fund. All of these pockets of money are sufficiently stocked to pay what is owed from the funds for several years, so unless the deadlock over the debt ceiling drags on for over a decade, there’s not much for feds to worry about.
The G-Fund was also suspended in 2017 by the former Treasury Secretary Steve Mnuchin when a similar Congressional deadlock prevented the borrowing limit from getting raised. During the pandemic, the debt ceiling was actually suspended so it hardly became an issue and didn’t affect any of the government funds – including the G-Fund.
For more information about the G-Fund, check out this article. It is a unique retirement savings vehicle tied to Treasury rates that is guaranteed by the government to never post a negative return.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.