Author Archives: GubMints

Federal Pay Freeze Lifted

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(Update 3/21/2013. The Continuing Resolution to fund the federal government through end of FY13 extends the federal employee pay freeze through FY13).

Good News.

By Executive Order, the Federal Pay Freeze in effect since 2009 will be lifted on March 27th, 2013.

Most federal employees (including those on the General Schedule) will see a 0.5 percent increase in their top line.

 

What you’ll take home at the end of the day is still uncertain. As mentioned here before, other items which could negate or even make 2013 a net loss in federal take home pay include:

 

  • Expiration of the Payroll Tax.
  • Increase in your FERS contribution/salary withholding.
  • Increase in FEHB Premiums.
  • 50% cut in the Health Care Flex Spending Account under ObamaCare.

That said, even a token increase of 0.5% is a much-needed morale boost for federal employees.

 

 

Don’t retire from FERS in 2013

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Ok, you can if you want to, but it will cost you roughly $350 per year versus waiting until 2014 to retire.

Fedweek produced a somewhat tongue-in-cheek article calling the 2010 National Defense Authorization Act the ‘No FERS Employee Retires in 2013 Act’.

For those who recall, the 2010 NDAA restored sick leave parity between the FERS and CSRS systems, phasing in full sick leave credit for FERS participants in 2014.

Would you gut it out an additional year just for a $350 per year annuity check? I don’t think so, but a FERS employees ‘on the fence’ in December of 2013 might wait until January of 2014 to retire.

We’ll have to wait and see.

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Debt Ceiling Maneuvers - Treasury to Raid TSP G Fund (again)

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On December 26th, while we were all busy recovering from the Holiday and headed out for year-end clearance sales, the Treasury Secretary dropped a surprise on us. He announced that the federal government will once again hit its ‘debt ceiling’ on Dec 31st, and that the Treasury will take ‘extraordinary measures’ to stretch out its checkbook.

Interestingly, the most comprehensive breakdown I’ve found of the ‘extraordinary measures‘ is from the UK’s Guardian, not from a US-based news organization. The four measures, listed in order of magnitude, are:

  1. Stop investments in to the Civil Service Retirement and Disability Fund (CSRDF)- the CSRS annuity for retired and disabled CSRS participants (note: I am clueless on the CSRS retirement system as I am not a participant. The link is informative, but an opinion piece).
  2. Suspending investments in to the TSP G Fund.
  3. Halt issuance of State and Local government securities (SLGS)
  4. Cease contributing to the Exchange Stabilization Fund (used to purchase foreign currency).

What #2 means to you and me is that, among other things, the Treasury Department will take out a 401k loan against your TSP balance. Specifically, the Treasury will borrow from the G Fund and issue IOU’s to pay them back at a later date.

If this all sounds familiar, it is. This is one of many extraordinary measures the Treasury took last time the nation neared its debt ceiling in May of 2011. After the debt deal was reached in August of 2011 (which set up Sequestration, aka the ‘fiscal cliff’), the TSP G Fund balances were made whole.

What’s it mean to you and me? Probably not much, as long as:

  1. You don’t take personal offense at the Treasury Secretary raiding your individual retirement funds (Your TSP balance).
  2. All past and present government employees and military participants in the TSP do not all sell-off their G Fund holdings at once.
  3. Institutional Investors and sovereign nations continue to purchase US Government-issued debt.

The mechanics of how the G Fund is raided are described pretty well in this 2002 GovExec article, when the G Fund was about to be raided in order to avoid a what-seems-paltry-now debt ceiling limit of $6 Trillion.