Treasury may borrow federal retirement funds in debt emergency

[Ken325]

This is an article from The Federal times http://www.federaltimes.com/article/20110405/BENEFITS02/104050306/1047/BENEFITS

It describes how the Federal Government may borrow from Federal employee's retirement accounts if the Republicans refuse to increase the Debt limit.  I know a lot of people do not like Federal employees, but this is criminal in my opinion.  The TSP accounts that are discussed are the equivalent of a 401(k), account not a pension.  This is money that was deducted from a paycheck to invest in a retirement account not an automatic pension. This just goes to show that you do not want to own any paper assets that are a liability to someone else.  We are going to see a lot of defaults when the SHTF and paper assets may not be worth a lot.

Edited due to copyright issues -- please see here for Fair Use info.  RR

[Malamute]

Create crisis through corruption/incompetence (in this case via transfer of wealth from middle class to banksters via QE n + 1 which increases "debt." and bolsters inflation)

Swoop in amidst public outcry with locked and loaded solution (in this case transfer of wealth from federal worker to banksters via retirement plundering to give the banksters new funds so that "debt" ceiling can be increased)

Solution is criminality masquerading as incompetence and it creates new crisis:  Increased "debt" and bolstered inflation.

Swoop in amidst public outcry with locked and loaded solution (nationalization of middle class's 401Ks:  let the middle class have "annuities" in the form of treasury bonds.)

Solution is criminality masquerading as incompetence, and creates new crisis:  Annuities worthless due to hyperinflation.

Swoop in amidst public outcry with locked and loaded solution (confiscation of land/precious metals from private ownership).

Solution is criminality masquerading as incompetence, and creates new crisis:  no tax base and zero capability to service debt.

Swoop in amidst public outcry with locked and loaded solution (Rothschild's Bank of International Settlements uses a small fraction of money stolen since 1913 to create World Government, World Currency, RFID-monitoring of travel, increased taxation (because former middle class needs to undergo "austerity,") mass immigration (tens of millions per year) from africa/middle east to north american and european continent, "diversity" is lyonized, etc, etc.

Solution is criminality masquerading as incompetence, but this time there is no outcry.  Because there's nothing left for the international banksters to plunder.  And hence outcry must be outlawed.

WAKE THE F UP
 

[ag2]

So what can we do about it?  I'm an optimist, but I still prepare for the worst.  I think most of us (TSP readers and many Joe the plumbers) are very aware of this corruption.  I think the last election was a strong indication that we want change (although the senate majority did not tip the other way, so that leaves me concerned).  But do we have the stamina to wait another 1.5 years; and can the economy be repaired then, or is it too late?

We have identified tons of problems, but is it beyond repair?  Maybe we need a, "What would you do, if you were in charge?" thread.

[Oil Lady]

This is scary!  

I used to administer 401(k) plans. This IS criminal! The number of laws being violated here is staggering!



::ETA::

Okay, I am digging through the article. Here are the names of the two plans being targetted.

1) the Civil Service Retirement and Disability Fund
2) the Thrift Savings Plan's Government Securities Investment Fund, or G Fund

(Evidently they add up to around $142 billion.)

Neither of them are specifically called a 401(k). One is called a "retirement and disability fund" while the other is a "thrift savings plan." It's been years since I had to deal with all these plans, and all the different names, and what the legalities are governing the different categories of plans. But its possible that these two particular plans are NOT true 401(k) plans, which means they might not be protected by the IRS Code's Section 401, Paragraph (k).  It's also possible they are not protected by ERISA.

But still this is both infuriating and frightening. I wonder if the folks who participate in either one of those plans includes any of our Senators or Congressmen.  I also wonder how willingly any Senators or Congressmen might be to sacrifice/risk their current holdings in such plans. Afterall, the government is merely "borrowing" from those plans, which means the government "intends" to (one day!) pay the money back into the plans. And therefore those loans would be backed up by "the full faith and credit of the United States Government." How can such a loan go wrong?? It's not as if Uncle Sam is a bad credit risk, right?  

[LvsChant]

The Thrift Savings Plan is the only 401(k) equivalent available for civil service employees... And... there is no option for them to put their investment into cash or a money market account, so it has to be 100% invested at all times. Because of that, many have had a large percentage of their savings in the G fund because of the volatility it has experienced in recent years.

Thanks for the update on this, I'm passing it along to those I know who will be affected by this. Perhaps the "F" fund would be a better option to keep their grubby mitts off of savings.

[LvsChant]

http://newsroom-magazine.com/tag/g-fund/

Information about the "extraordinary measures" the treasury can take it the debt ceiling is reached...

[Malamute]

They'll pull off some creative accounting legardemain to justify a raising of the debt ceiling and so at this point the real question is whether Helicopter Ben's gonna use Airwolf or Blue Thunder.

[OldManSchmidt]

I don't want to sound cold hearted, but who cares?  The feds have been stealing we mere mortals' retirement for decades.  Ever heard of Social Security?  Most all non-government employees pay into it (the self employed do not all pay into the fund) and the feds have raided it into insolvency.  All the while, government employees' pensions/retirements have been shielded from this government sanctioned theft.  Perhaps suffering a bit of the pain that we have suffered for decades will finally convince them that such behavior on the part of the feds is in fact not alright.

[RPZ]

It is not just federal workers that are at risk here; the writing is already on the wall for the looting of private pension funds.

Above all else, this should be the main objective in this country right now; the elimination of the relationship between the issue and control of our money and private banks. The Icelanders did it. They had their prime minister and several banksters arrested, and basically told the banks they were not going to honor the so-called "debts" because they amounted to, yes, fraud.

[Ken325]

The feds have been stealing we mere mortals' retirement for decades.  Ever heard of Social Security?  Most all non-government employees pay into it

 

Um, wrong...  I'm a federal employee.  I got into survival-ism after working 12 hour days, 7 days a week during the Katrina Hurricane response.  There are some slackers who abuse civil service protections, but you have a lot of great feds as well. For example the military uses the FERS system. We pay social security just like you.  There are 2 main federal retirement systems called CPRS and FERS.  CPRS is the old fashioned pension system.  They have been phasing this out for 20 some years and only retirement age people still have it.  The FERS system has a small pension component (about 10k/yr) but the bulk of your retirement is in a 401k type program.  We get some matching (5%) like most people do who have these accounts, but this is our money that we have invested in retirement.  According to this, the government can take our money because they say they are good for it.  Read the last paragraph of the story again.  The part where it says if the government cant pay then we are screwed because the economy has collapsed anyway.

One thing to keep straight is that Feds enforce laws put in place by politicians. Keep federal employees and politicians separate. We do not get to write the laws.  If we did about 60% of them would be edited.  The problem is the politicians the people elect, not the people trying to enforce the law.  I became a Fed because I have a science degree and most science positions are in the federal government.  I know that this is not the best place to be right now, but positions in my field are very limited.  I am happy to have a job.  Now I find my retirement is going to be stolen.  I'm pissed, and I think people should know that Obama's Treasury Secretary is doing this.  I posted it on a forum because you know the press will say nothing.  I say this to you.  If they can do it to me then eventually they will do it to you.  Will we say screw you because we don't like (your profession) so let them clean out the accounts that you built up with your money?  Think about it.

[fritz_monroe]

Well said, Ken.  This is just the first step in taking part of everyone's retirement.

First They came... - Pastor Martin Niemoller
First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for the Jews,
and I didn't speak out because I wasn't a Jew.

Then they came for me
and there was no one left to speak out for me.

(yes, I realize that this may or may not be the correct wording, but you get the gist)

People often decide that all federal employees are leaches.  But I know MANY fed employees and the vast majority do good work and are dedicated to their mission.

For me, the irony of this is they are talking about taking a loan from the G fund.  This fund is invested in T bills.  The money was already loaned to the Feds when the T bills were bought, now they are going to "borrow" the money a second time.

[LvsChant]

I don't want to sound cold hearted, but who cares?  The feds have been stealing we mere mortals' retirement for decades.  Ever heard of Social Security?  Most all non-government employees pay into it (the self employed do not all pay into the fund) and the feds have raided it into insolvency.  All the while, government employees' pensions/retirements have been shielded from this government sanctioned theft.  Perhaps suffering a bit of the pain that we have suffered for decades will finally convince them that such behavior on the part of the feds is in fact not alright.

OMS: Military and Civil Service employees are currently required to pay social security tax at the same rate as anyone else.

Civil service employees participate in the TSP (Thrift Savings Plan) as a govt equivalent to a corporate 401(k). In some ways, it may be better than the savings plans offered by private companies (some costs of administration as smaller, they claim) and the govt does have a matching program which encourages participation. However, the choices of investments within the plan are dismal. If not for the matching program and the fact that the income is tax-deferred, many people probably wouldn't participate at all.

As far as people who were civil servants not paying SS tax, I know a little bit from family experience: My Dad, who retired several years ago was one of those folks who was transferred into a different system several years into his work career with the Dept. of Agriculture. Basically, what happened with him was that, after he had been paying into the social security system for several years, he was transferred into the new system (don't know the acronym - perhaps CPRS). This meant that he would not be eligible for any social security benefits at all, even though he had already paid into the system for years. From what he said, he got no credit at all for the years he had already paid in. Those folks had more of their money stolen by their generous benefactor than those not working as civil servants at the time.

Years later, he fought with the social security folks to at least receive social security benefits from the payments he made as a military member (it isn't a very large amount, but it was the principle of the thing). Somehow, as one of those employees who fell into this category, the SS administration recorded that all his benefits were eliminated, regardless of whether he had contributions from some other work. Even after he got them to admit their mistake, he didn't receive any back payments, from what I understand.

Now, I am in agreement with you that our govt bureaucracy has gotten so huge and out of control that I would like to see a very large amount of it cut... which would mean that many folks would lose their govt jobs and be forced into the private sector. However, those folks who are working in those jobs for whatever reason aren't deserving of theft of their personally saved money any more than anyone else.

[NWBowhunter]

The democrats have already floated the trial balloon several times to take over 401k's. By forcing a them to invest in treasuries. They will use this crisis to accomplish it.

Ken is right the federal employees have had their retirements put into treasuries and they are virtually worthless now. The treasury will use those paper assets to try to double down and extend the illusion that are government is solvent. It's destine to fail. Then say goodbye to your private funds.

It's pushing me to roll my money out of the 401k into a self directed IRA.

[OldManSchmidt]

I stand corrected.  Working from old info I guess.

As a point of clarification, I do not lump fed employees and politicians together.  Fed employees are generally at least humans, not animals.  There are exceptions in both camps.

Nonetheless, the politicians have made being a federal employee a lucrative choice in employment, IMO.  They have also created far too many federal positions.

On point, I do not agree at all with government compelled retirement nor do I agree with, put simply, federal theft of private savings no matter who the employer is.  In attacking the retirements of federal employees, perhaps all federal employees will see  that they have "skin in the game".

[fred.greek]

The author of the core article has not responded to my inquiry… If the accounts are ALREADY “invested” in federal treasuries, which represent a loan to the government, how can this money be again “borrowed”.  Unless you’re going to “steal” it, and (temporarily?) erase this particular “debt”, so more can be borrowed from people who matter, like the Chinese?

[Ken325]

It looks like the government is now borrowing against the retirement accounts of federal employees.  But the article says not to worry, we will be paid back when congress increases the debt limit.  Is the message that we shouldn't vote for the tea party or Republicans because they will not raise the debt limit, forcing us to take your retirement? 

http://www.federaltimes.com/article/20110516/BENEFITS03/105160302/1047/BENEFITS

[endurance]

Thanks for the article Ken.  I assumed they were borrowing from CSRS and FERS, but never imagined they'd actually borrow from TSP.  Unbelievable. 

Might be time for that signature loan...

[tamo42]

OMS: Military and Civil Service employees are currently required to pay social security tax at the same rate as anyone else.

Civil service employees participate in the TSP (Thrift Savings Plan) as a govt equivalent to a corporate 401(k). In some ways, it may be better than the savings plans offered by private companies (some costs of administration as smaller, they claim) and the govt does have a matching program which encourages participation. However, the choices of investments within the plan are dismal. If not for the matching program and the fact that the income is tax-deferred, many people probably wouldn't participate at all.

As far as people who were civil servants not paying SS tax, I know a little bit from family experience: My Dad, who retired several years ago was one of those folks who was transferred into a different system several years into his work career with the Dept. of Agriculture. Basically, what happened with him was that, after he had been paying into the social security system for several years, he was transferred into the new system (don't know the acronym - perhaps CPRS). This meant that he would not be eligible for any social security benefits at all, even though he had already paid into the system for years. From what he said, he got no credit at all for the years he had already paid in. Those folks had more of their money stolen by their generous benefactor than those not working as civil servants at the time.

Years later, he fought with the social security folks to at least receive social security benefits from the payments he made as a military member (it isn't a very large amount, but it was the principle of the thing). Somehow, as one of those employees who fell into this category, the SS administration recorded that all his benefits were eliminated, regardless of whether he had contributions from some other work. Even after he got them to admit their mistake, he didn't receive any back payments, from what I understand.

Now, I am in agreement with you that our govt bureaucracy has gotten so huge and out of control that I would like to see a very large amount of it cut... which would mean that many folks would lose their govt jobs and be forced into the private sector. However, those folks who are working in those jobs for whatever reason aren't deserving of theft of their personally saved money any more than anyone else.

I think there is a fundamental mistake here in thinking that the "government" exists as a separate thing. It's a legal fiction like any other corporation, partnership, llc, etc. All those indebted dollars that have been created over time have been going into someone's pocket: the mail clerk, the university researcher, the congressman's brokerage account, the welfare recipient, etc. Millions upon millions of people have been receiving money from the government for possibly their entire lives. So when the government cuts spending (if such a thing were to ever actually happen) it is real people receiving less than they did before. That's just the way it is. It's not going to be fair, and it's not going to be pretty.

Now yes, those funds were counterfeited into existence and then extorted from the productive members of society, but that doesn't change the very real pain that those dependent on the government hand out will experience. That's what the riots in Greece are about.

[endurance]

Something to remember here is TSP is the equivelent of a 401k.  Most of that is the employee's own money; it's their contribution.  Employees contribute up to 14% toward the plan and are matched for the first 5%.

There's no consent by the employees to have their contributions used for a 'short term loan'.

[Ken325]

Might be time for that signature loan...

Looks like a plan is in place to shut that option down as well.  I guess the politicians are afraid to let people have access to their own money.  They probably think we will not spend it correctly. 

http://content.usatoday.com/communities/ondeadline/post/2011/05/senate-bill-seeks-to-limit-401k-borrowing/1

I am on the look out for capitol controls.  This is the name for laws that keep you from moving your money out of the country.

[endurance]

Looks like a plan is in place to shut that option down as well.  I guess the politicians are afraid to let people have access to their own money.  They probably think we will not spend it correctly. 

http://content.usatoday.com/communities/ondeadline/post/2011/05/senate-bill-seeks-to-limit-401k-borrowing/1

I am on the look out for capitol controls.  This is the name for laws that keep you from moving your money out of the country.

That said, it's not law yet.

[chrisdfw]

Since we have hit the debt limit, the federal government has halted its contributions to federal pension funds. Private companies do this all the time, and they have to make up the missed contributions, but its usually one of the signs a company is headed for bankruptcy.

Its happening.

Now, as of this past week.

[GreyWolf]

Thanks to all who have posted and shared info/opinons here. It helps us noninformed economicaly confused people. Bottom line in my opinion is that it is only a matter of time before our economy implodes and the ones causing it know this.They are running around trying to plug the leaks until the dam breaks. They are  trying to keep the system going for as long as possible. After all what else can they do?Once the economy collapses we will be like the old Soviet Union, we'll be standing on the street corners selling our possessions to whomever to be able to feed our families. Find a good friend who has a farm. At least they will be able to grow enough to eat.

[Ken325]

the federal government has halted its contributions to federal pension funds.

It is worse than this.  They are borrowing the money from private retirement accounts.  If Walmart did this people would go to jail.  This is not halting contributions to a pension, this is what Jack warned about.  Again, we are not talking about a pension.  We are talking about money that is subtracted from a persons paycheck and put into a private account so it can grow tax free like a 401k.  This is an involuntary loan taken from an account that belongs to an individual.  The individual can't move the money out unless they change jobs or pay a huge tax penalty.  Federal employees have to use this retirement plan because of the potential conflict of interest issues.  If I own a lot of Exxon stock, and I am deciding who gets a drilling permit, then I have a conflict of interest.  Because it is in the TSP mutual funds controlled by the government then I can invest in the stock market without a conflict of interest.  The problem is the government controls the plan and it needs to borrow money!  I have already reduced my contributions but the only other thing I can do is take out a loan against my account.  This is what Endurance is advising. 

[Crash]

All I can say about this is "The last official act of any government is to loot the nation." 

[Malamute]

I am on the look out for capitol controls.  This is the name for laws that keep you from moving your money out of the country.

Right you are, Ken.

That said, there's a 2500 mile long northern border and a 1250 mile long southern border to this country and I have friends across both borders so I wish your employer the best of luck in stopping me and my money.

[chrisdfw]

It is worse than this.  They are borrowing the money from private retirement accounts.  If Walmart did this people would go to jail.  This is not halting contributions to a pension, this is what Jack warned about.  Again, we are not talking about a pension.  We are talking about money that is subtracted from a persons paycheck and put into a private account so it can grow tax free like a 401k.  This is an involuntary loan taken from an account that belongs to an individual.  The individual can't move the money out unless they change jobs or pay a huge tax penalty.  Federal employees have to use this retirement plan because of the potential conflict of interest issues.  If I own a lot of Exxon stock, and I am deciding who gets a drilling permit, then I have a conflict of interest.  Because it is in the TSP mutual funds controlled by the government then I can invest in the stock market without a conflict of interest.  The problem is the government controls the plan and it needs to borrow money!  I have already reduced my contributions but the only other thing I can do is take out a loan against my account.  This is what Endurance is advising.

I understand the difference. What I am saying is that they have already halted contributions to pensions. What you are saying is that they will actually borrow from retirement funds, that has not happened yet. The pension contribution halt has already happened, this borrowing from the plans has not as of yet happened. It may be a smokescreen to hide the things they are already doing, which are bad enough.

I am an accountant and one of my closest friends specializes in pension law and retirement plans, trust me I know all about thrift savings, 401k, 403b, IRAs, Keough, SEPs, defined contribution, defined benefit.

I still worry about the things that are already happening ahead of what might happen in the future.

[Veritas]

I think the states are eventually going to do the same thing. Illinois is already making changes to the state and local pension fund laws. It is supposedly also being tossed around in the IL legislature that the private pension funds of municipalities (which are privately managed and not in trouble like the states pension funds) are going to be seized by the state and placed into the already practically destroyed state fund, causing those municipal employees who had stable safe retirements to be put into the states screwed up system. And the b$%!* of it all is you can't opt out. It's a mandatory system and they take your money against your will, "for your best interest and benefit".

[ag2]

When this begins to cause great discomfort to people's families, I suspect folks will ponder the old saying, "It's too late to vote them out and too early to shoot the bastards."

[endurance]

I'm in that uncomfortable feeling that my retirement I've been contributing to for the last 15 years has been raided and now I'm about to be laid off until congress can pull their heads out.  In the meantime, any remaining investments I have in stocks are going to tank and if I try to pull out of stocks, my only option is to put them in T-bills, where they will spend it against my will. 

Glad I have outside savings, but this system is a total CF.