- The Washington Times - Tuesday, February 4, 2003

Although they can no longer contribute money to their tax-deferred 401k plans, former and retired feds from postal clerks to CIA operatives and ex-members of Congress remain major stakeholders in the $100 billion federal Thrift Savings Plan, Uncle Sam's retirement plan.
Accounts held by former feds, many if not most of them retirees, account for 479,000 or 16 percent of the TSP's 3 million accounts. Military personnel, who were allowed to join the TSP last year, have 309,000 accounts, 10 percent, with the numbers growing dramatically every month.
So why would anybody who is retired from the government or who left it for the private sector stick with the federal TSP when they may have a "better" plan with more options at their new company?
Many say the reason is simple: While the 401k accounts of many Americans have taken a big hit dropping 20 percent or more last year people in the TSP's G-fund have been making modest (around 5 percent in the year 2002) gains.
The G-fund is unique to 401k plans. It's invested in special guaranteed U.S. Treasury securities that have never produced a negative return. The rate is set monthly by the government and the G-fund securities aren't available to investors outside the government.
During the 1990s, the C-fund (a fund that tracks the Standard & Poor 500 index) was the investment of choice for TSP participants. It routinely returned 20 percent or more. One year saw nearly a 40 percent return.
But as they neared retirement, many feds shifted either their payroll investments or account balances from other TSP funds into the G-fund. So far that's paid off. A 5 percent return, which would have been a disappointment during the 1990s, is now leader of the pack.
Federal retirees like retirees from private-sector firms cannot contribute to their "company" 401k plan. But they can change funds, and the G-fund has been the wise choice.
Performance pay system
The Bush administration faces an uphill but winnable battle in its fight to set up a governmentwide merit pay system.
Several federal agencies or parts of them, such as the Navy, have been operating under experimental performance-pay systems for years. Grades are replaced by pay "bands" that include the pay ranges of several grades. Bosses can decide where workers belong in each band, and move them up accordingly.
At one such installation a supersecret outfit that makes maps for the Pentagon the system works without longevity raises, which are plowed back into the merit-pay pool.
Health-insurance coverage
Most federal and postal workers did not change health plans during the last open season, even though some plans boosted premiums 20 percent or more. The average increase was 9 percent.
Some of the people who did switch plans panicked when they got their new enrollment cards that listed their coverage date with the new plan as mid-January. A possible problem, if you already are being treated.
Don't fret; your coverage really did become effective Jan. 1.
Payday blues
This is the week that most white-collar federal workers will notice the new 3.1 percent pay raise on their checks or bank balances. Don't blink or you'll miss it.
Many workers were anticipating a 4.1 percent increase that Congress promised, but hasn't approved yet.
To add insult to injury. some workers who signed up for long-term-care insurance said the first premiums weren't deducted from their checks in January.
So unless you got a promotion and another raise, you may find it hard to believe anything has changed.

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