Treasury Taps Federal Retirement Coffers Again

Treasury Secretary Jack Lew
 
Treasury Secretary Jack Lew Molly Riley/AP

The Treasury Department once again is tapping federal retirement programs to buy the government more time to increase the nation’s debt ceiling.

Treasury Secretary Jack Lew on Friday announced the extraordinary measures the government will use to avoid a default through the summer, including tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the government securities (G) fund, the most stable offering in the Thrift Savings Plan’s portfolio.

Lew could not provide a specific timeframe for the debt issuance suspension period. “The effective duration of the extraordinary measures is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts, changes in expenditure flows under the sequester, and the normal challenges of forecasting the payments and receipts of the U.S. government months in the future,” Lew wrote in a May 17 letter to House Speaker John Boehner, R-Ohio, and other congressional leaders.

The G Fund is invested in interest-bearing Treasury securities — bonds — that make up the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees’ Retirement System, and those investments are made up of securities also considered part of the public debt.

Federal law requires the Treasury secretary to refill the coffers of the G Fund and the CSRDF once the issue of the debt ceiling is resolved and to make up, in addition, for any interest lost on those investments during the suspension.

Because of this, employees and retirees are not affected.

The last time Treasury tapped feds’ pensions was on Dec. 31, 2012, as the government hit its debt ceiling of $16.4 trillion. The government made whole the retirement coffers and reinvested $28 billion back into the G Fund in late February.

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