Treasury Borrowing from Civil Service Retirement Funds as Nation Hits Maximum Debt Ceiling: How this Impacts Your Retirement Benefits

Wednesday, May 18, 2011

(National Federation of Federal Employees)

Earlier this week, Treasury Secretary Timothy Geithner announced that the government had reached the national debt-ceiling, the maximum amount the government may borrow to fund its obligations. In a letter to key leaders in Congress, Geithner explained that he will be borrowing funds from the Civil Service Retirement and Disability Fund (CSRDF) and the Government Securities Investment Fund (G Fund) in order to prevent the government from defaulting on its loans. Until elected officials can agree to raise the debt ceiling, the government will continue to borrow from federal workforce retirement funds.

This announcement has left many federal employees concerned about their benefits and whether or not they will be receiving the retirement funds they have earned. By law, the government must make these funds whole once a debt ceiling increase is passed. This means that in the long term, all obligations will be met. If a debt-limit increase is not passed before the retirement funds run out however, there may be some interruption in benefits, in addition to disruptions in other federal services.

Treasury released a packet of frequently asked questions on their policy of borrowing from civil service retirement funds. Click here to access the Treasury FAQs.

Comments

Sandy 05/23/11 11:27 am

Nothing is sacred.

How can they possibly"borrow" from our retirement funds? We know good-n-well the government doesn't pay back what it borrows...that's why we're $14 trillion in debt! I plan to move my funds OUT of the G fund and reduce my voluntary contributions, and invest it in a private alternative retirement account.

Karl 05/23/11 10:53 am

Theft

In the past they have "borrowed" from both Civil Service retirement funds, but also other funds without paying it back. During my career as a federal employee of over 30 years raises have not kept up with inflation or those in private industry. Now we have a freeze on raises and may not get retirement pay at all. What are we to live on as inflation continues to (in reality) raise prices so todays dollar might be worth $0.25 in three years?

Bob 05/20/11 10:07 pm

How can the government borrow money it has already borrowed? If it's in any trust fund based on US government bonds, then the government has already spent that money. So, they're borrowing the same money twice? Really, I believe they're not counting those bonds owned by a government agency to count against the debt ceiling. In other words, the $3 trillion or so the government owes Social Security and any Government Retirement funds isn't counting toward the $14.3 trillion debt ceiling. This allows them to borrow another $3 trillion or so without busting the debt ceiling anytime soon.

Jeff Walker 05/20/11 5:12 pm

Should employees withdraw from the G Fund?

What effect would it have if we were to, en masse, move all our retirement currently in the G Fund to other TSP Funds?

Jeff Walker 05/20/11 5:07 pm

First they freeze us then they borrow from us!

Isn't it incredible that the Administration starts the year by freezing our pay for two years, then when they run short, they borrow from our retirement savings! Civil servents are clearly taking the brunt of the political games being played in Washington. And, the chance that we still stand to lose Step Increases, Locality Pay adjustments, and be forced to take furlough suggests they are not finished with us. I'm annoyed with the House, but am becoming increasingly annoyed with the White House for using us as pawns in political stand-offs.

Treasury Borrowing from Civil Service Retirement Funds as Nation Hits Maximum Debt Ceiling: How this Impacts Your Retirement Benefits

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