News From GovExec on TSP

[swsop]

DAILY BRIEFING January 17, 2006

Consultants advise TSP not to change investment mix

By Karen Rutzick

An outside consulting firm on Tuesday advised Thrift Savings Plan administrators to stay the course with all investments.

The TSP, which is a 401(k)-style retirement savings plan for federal employees with assets of almost $175 billion, hired Chicago-based consulting firm Ennis Knupp & Associates to perform the first-ever external review of the plan's investment practices.

The consultants presented the first of what will be four recommendations to the TSP Board at a monthly meeting Tuesday. The initial review focused on the indexes that the TSP tracks for its common stocks (C), small- and mid-size companies (S), fixed income securities (F) and international stocks (I) funds.

The TSP is managed passively, meaning its holdings simply mirror indexes as opposed to using mutual fund managers to attempt to beat the market. For each of the four funds reviewed, the consultants told the board its current indexes remain the best choice.

The TSP board subsequently passed a resolution to retain the indexes.

The C Fund, which follows the S&P 500 Index of the top 500 stocks, and the S Fund, which tracks the Dow Jones Wilshire 4500 Index of the next 4,500 stocks, cover the universe of domestic stocks for TSP participants, consultants said.

Ennis Knupp advisers Russell Ivinjack and Neeraj Baxi told the board this combination is optimal for investors because the indexes are widely-followed and provide access to all U.S. markets.

The consultants also said switching to the next-best option, the Russell 1000 and Russell 2000 for the C and S funds respectively, would cost about $225 million.

For the F Fund, Ennis Knupp recommended sticking with the Lehman Brothers Aggregate Bond Index. The consultants noted that it is the most widely accepted index and provided the most diversification. Switching to another index would cost about $15 million, they said.

The I Fund was perhaps the toughest decision for the board and its consultants. The current index used -- the Morgan Stanley Capital International Europe, Australasia, Far East Index -- does not include Canada or emerging markets like Latin America.

"In the theoretical world, the all-inclusive fund is better because it is more diversified," TSP Executive Director Gary Amelio said.

But a number of factors stand in the way of switching to an index that includes stocks from these countries. The current index is valued daily, as are all of the other TSP funds, allowing participants to change the makeup of their holdings on a daily basis. But indexes which include emerging markets and Canada are valued monthly. Switching to monthly valuation of the I fund would require a change in policy and could create confusion and inconvenience for investors.

Also, the current index is the largest, and the board favors larger indexes so that nonfederal investors can carry the weight if TSP participants move their billions of dollars around dramatically.

Once indexes with emerging markets and Canada become daily-valued and grow larger, the board will reconsider the I Fund's index, TSP Board Chairman Andrew Saul said. The growing economies of China, India and other countries eventually will be too valuable of an investment opportunity for TSP participants to miss out, he said.

"We're going to have to look at this thing," Saul said. "I think we'd be remiss not to."

Future presentations from Ennis Knupp will cover potential changes in asset management, which is currently performed by Barclays Global Investors.

The consultants also will review the possibility of adding funds such as a real estate investment trust, which is an option some lawmakers are advocating. Amelio said key staffers on the House Government Reform Committee called a meeting Friday to discuss progress on the REIT option.

The TSP also announced at Tuesday's meeting that it is retaining the Metropolitan Life Insurance Co. to provide annuities for TSP participants. TSP participants have the option, upon retirement, of converting their savings into a stable annuity. About 11,000 retirees now have such annuities, officials said.

swsop

[swsop]

International stocks gain in popularity among TSP investors

By Karen Rutzick


Thrift Savings Plan participants are moving their money into international stocks as that option outperforms others, TSP statistics show.


The TSP, federal employees' version of a 401(k) retirement savings plan, offers five basic funds. For the 12 months through January 2006, the international (I) fund performed best, earning a 22.91 percent return.


Participants took notice. In that same time period, employees in the older Civil Service Retirement System went from having 4 percent of all TSP investments in the I Fund to placing 6 percent there.


Over the same time period, employees in the newer Federal Employees Retirement System moved from allocating 5 percent of investments to the I Fund to 8 percent.


The I Fund percentages increased even as a new sixth option, the lifecycle (L) funds, drew out 5 percent of investments for both CSRS and FERS employees. The L funds blend the stand-alone funds based on expected retirement dates, with the mix automatically becoming more conservative as participants near that date.


The movement is plainly illustrated by interfund transfers, which are shifts of money already in the TSP between funds. In January, participants added $753 million to the I Fund through interfund transfers. The I Fund was the only stand-alone fund to increase. By contrast, participants removed $1.2 billion from the C Fund, which invests in the stocks of the 500 largest domestic companies and had a 12-month growth of 10.4 percent.


Interfund transfers are representative of TSP participants who actively manage their investments. But TSP officials said participants who jump on market trends may not fare better in the end than employees who ride out the market.


"I'm sorry to see the herd following the I Fund," TSP Board member Alejandro Sanchez said at a monthly board meeting Tuesday.


Gary Amelio, executive director of the TSP, said "it's a sliding scale" for investors who aggressively manage their accounts, on how they perform compared with the L funds, which at times will do better than the market and at times will do worse.


TSP Chief Investment Officer Tracey Ray noted a $1.3 million trading cost for the I Fund in the month of January. That number was significantly higher than the next highest fund in trading costs, which was the S Fund at about $200,000.


Ray said the costs came because participants moving into the I Fund are "buying into an up-market, which is going to make it more expensive."

[grandma]

"I'm sorry to see the herd following the I Fund," TSP Board member Alejandro Sanchez said at a monthly board meeting Tuesday.
So now WE are the herd !!! Where does he want us to put our money??

TSP Chief Investment Officer Tracey Ray noted a $1.3 million trading cost for the I Fund in the month of January. That number was significantly higher than the next highest fund in trading costs, which was the S Fund at about $200,000.
Ray said the costs came because participants moving into the I Fund are "buying into an up-market, which is going to make it more expensive."
Is he saying it cost TSP 1.3 mil for TSPers to move into the I ?? ...that it costs TSP money for us to make money? I'vew gotten lost here somewhere - it sounds like he is saying that the folks that were NOT in I are putting up the money to pay the gains for those who were......:confused: ??

[cowboy]

Mr. Sanchez thought a few more players would jump on board the L funds that they started. People will buy the up fund because it is human nature. I believe the cost may be higher but return is much higher also. As any board meeting they have to have something to talk about to justify the meeting. Maybe it is his I fund regulators that are costing the money?

[Gilligan]

March 20, 2006

TSP officials say few plan members fell for 'phishing' scam
By Jenny Mandel
jmandel@govexec.com

Thrift Savings Plan officials said Monday that they think few people were taken in by an e-mail hoax.......The scam first came to plan administrators' attention last Thursday, when calls began arriving around 2 p.m........
About 500 people called TSP Thursday about the suspicious e-mails.......

For more info:
http://govexec.com/story_page.cfm?articleid=33636&dcn=todaysnews

[swsop]

TSP board balks at Congress' push for real estate fund
By Karen Rutzick

The Thrift Savings Plan board is digging in its heels against a plan to add a real estate investment option that is gaining momentum in Congress.

The TSP, federal employees' version of a 401(k) retirement savings plan, invests participants' $180 billion in five basic funds and life-cycle options blending those funds based on anticipated retirement dates. But 163 members of Congress have signed on as co-sponsors of a bill to add a Real Estate Investment Trust fund.

The House Government Reform Subcommittee on the Federal Workforce and Agency Organization will hold a hearing April 26 on the REIT fund option and will mark up the bill immediately following the hearing.

swsop

Full story: http://www.govexec.com/story_page.cfm?articleid=33856&dcn=e_gvet

Return

[Gilligan]

Vote on contentious TSP real estate fund postponed

By Karen Rutzick
krutzick@govexec.com

After a heated, adversarial hearing, lawmakers delayed a vote Wednesday on a bill to add a real estate fund to the Thrift Savings Plan.

http://govexec.com/story_page.cfm?articleid=33949&dcn=todaysnews

[swsop]

TSP international fund far outpaces others in yearlong returns

With July's returns as part of the equation, the yearlong performance of the Thrift Savings Plan's international stocks fund is now head and shoulders above its other funds.

http://www.govexec.com/story_page.cfm?articleid=34705&dcn=e_gvet


Barbara :) :)

[swsop]

TSP funds make small gains in September

The five basic funds making up the Thrift Savings Plan made incremental gains in September.

None lost any ground, but only one gained more than 1 percent. The C Fund, composed of common stocks on the Standard & Poor's 500 Index of the largest domestic companies, earned 2.58 percent last month. That gain brings the C Fund's 12-month earnings to 10.78 percent.

The TSP is a 401(k)-style retirement savings plan for federal employees and some members of the military. At last count, it had $191 billion in its funds.

Full story: http://www.govexec.com/story_page.cfm?articleid=35171&dcn=e_gvet

SWSOP :) :)

[Gilligan]

posted this info today.
October 16, 2006
TSP board mulls legislative agenda
By Karen Rutzick
krutzick@govexec.com

One change being discussed is automatic enrollment upon hiring.

Another possibilty is to change the default fund from the "G" fund to an "L" fund automatic enrollment upon hire.

http://govexec.com/story_page.cfm?articleid=35275&dcn=todaysnews

[Gilligan]

November 20, 2006

Consultants advise against adding real estate fund to TSP
By Karen Rutzick
krutzick@govexec.com

A consulting firm delivered a long-awaited report Monday advising Thrift Savings Plan officials not to add a controversial real estate fund to the 401(k)-style retirement savings program for federal employees.

http://govexec.com/story_page.cfm?articleid=35533&dcn=todaysnews

[Gilligan]

December 1, 2006

TSP investments grow steadily in November
by Karen Rutzick
krutzick@govexec.com
http://govexec.com/story_page.cfm?articleid=35583&dcn=todaysnews

Each of the five basic funds in the Thrift Savings Plan posted solid gains in November.



The 401(k)-style retirement savings plan for federal employees, now worth more than $200 billion, made the biggest strides last month in investments in small- and mid-sized domestic companies. The S Fund, which invests in these companies by tracking the Dow Jones Wilshire 4500 Index, earned 3.54 percent in November for a 12-month total return of 15.61 percent.

[swsop]

Thrift Savings Plan hacker attack prompts extra precautions

SWSOP

http://www.govexec.com/story_page.cfm?articleid=35873&dcn=e_gvet

[ebbnflow]

I surf the Internet as Guest and I already deactivated NetBios way before. :D

...
Cookies, File Encryption, and Erasing Files.
Not really security as such, but privacy. Cookies are often discussed as a bad thing that steals your information. Well, here's the scoop. Cookies are given to your computer browser when it visits a web site. When you check "remember me next time I log in", the cookie is what remembers that. Now there are ways to modify a local cookie and use it to do bad things on the server, but that's outside the scope of this tutorial. For the most part, don't worry about cookies. However, a type of cookie can also be issued to you that will collect more data than you wish, but here's the kicker: you have to visi a website run by unethical individuals. So avoid sites that offer free copies of Microsoft Office and other things that seem too good to be true. “There's no such thing as a free lunch”. ‘Twas true before the Internet, will be true after the Internet. The most important thing to remember about cookies is that they can be deleted. If you're reading this from a public computer – don't forget to clear your browser's cache!

Ports and Services.
So you’re trying to find out how to “secure” your PC and everything you read says turn off all unnecessary services and close unused ports. Yea RIGHT, what's a port? Where are these services and how do I turn them off? Do this, give your PC the good ‘ol three finger salute – CTRL+ALT+DELETE (hold down the three keys at once). Now click on the Task Manager Button. Now click the Processes tab. You see all of those weird names listed in the box? Those are services, well at least some are. The majority of the Processes end with .exe, and control how you computer works. For example, see the services.exe process. services.exe is a part of the Microsoft Windows Operating System and manages the operation of starting and stopping other services. This process also deals with the automatic starting of services during the computers boot-up and the stopping of services during shut-down. Google or www.liutilities.com is a great resource for finding out what all of these services do. Be warned - if a virus ever used any of these services, that will be noted. Don’t freak out thinking you have a virus. I know of at least 50 viruses that infected or used the services.exe program.

Now before I get to showing you how, I have to explain what is known as TCP. This is not an exact description – but just a loose definition. The terminology is something you will need to research yourself as you get further along and become more comfortable with networking. I have put the keywords for your search in bold.
For devices (network cards, modems, even cell phones) to communicate with each other they must speak the same language. Computer programs communicate over the web with a protocol called TCP or UDP (a kind of language that all Operating Systems understand). Now, each program or application on your computer distinguishes itself from other applications they're communicating with by reserving and using a port number. This makes the flow of data easier. If we didn’t have different ports it would be like going to a major football stadium and there were only one door to enter and exit. When communicating over the internet, a destination and source port are opened between two computers and then data starts flowing back and forth through the two open ports. Many servers, like email servers, always listen on the same well-known port number. The actual port number is arbitrary, but is fixed by tradition and by an official allocation or "assignment" of the number by the Internet Assigned Numbers Authority (IANA). Now to prevent some bad person from connecting to your computer via an open port, let's take a look at one that's open by default. File and Print Sharing - NetBIOS over TCP/IP uses ports 137-139. Now then, there are several default shares set up on your computer: C$, AMDIN$ and IPC$. These are hidden shares (hidden in the sense that Windows Explorer will not display them) and can be connected to remotely. Turning off File and Print Sharing “closes” ports 137-139 and removes the above hidden shares. Here's how:
Control Panel > Network and Internet connections > Network Connections > Local Area Connection
Right click > Properties
Select Internet Protocol (TCP/IP) > Properties
On the General tab select Advanced
Next you will have 4 tabs IP Settings/DNS/WINS/Options
On the WINS tab disable Netbios over TCP/IP
So you just learned how to close a port and stop an unwanted process. But wait, there's more! Don't get into the trap of thinking things are secure if you do this and unsecure if you don’t. TCP was designed to make communication between computers possible, as was NetBIOS.
Your best bet for security is using, and understanding, a firewall. Now, the one you have is on by default in XP Service Pack 2. If you are not on Service Pack 2, well then we need to have a chat about updating Windows. Anyway, here's the link to Microsoft's Firewall
http://www.microsoft.com/windowsxp/using/security/internet/sp2_wfintro.mspx

You don't have to use Microsoft's - there are many others. My preference is to use a hardware firewall. I use the firewall function built into my Linksys wireless router. In any event – you must have a firewall.
Let's take a look at computing from a behavioral science point of view, for a moment. People just want things to work and believe that their antivirus “suite” of tools - Virus Protection, Firewall and whatever else they're putting in there these days - keeps them completely safe. Wrong! Let's say for a moment that you have a fully patched and locked down PC with an updated Antivirus and a properly configured firewall; an internet connection and Instant Messenger (IM), perhaps a web camera, and, of course, email. You are using applications that open a connection to your PC. As you now know, when you check your email, you open a port. When you Instant Message your buddy, you open a port. Now, even with the all the preventative measures in place, someone can still take control of your PC remotely. When chatting online, using either IRC or IM, the program you use to chat opens up a port on your computer and the “chat server” - you know this. What you don't know is when you fire up that web camera so you can see who you're chatting with or download a picture from who ever it is you're chatting with, another port is opened. But this time it’s not between you and the server, it's between you and the computer owned by the person you're chatting with. Yup, that's right, there is a direct connection between your computer and your buddy's computer. And as far as the firewall goes, it's a legitimate connection because you started the conversation. This is all fine and good unless it's not your buddy, rather some anonymous person you met on the internet.
For example, you have been chatting with someone of the opposite sex for a few months and feel you know this person really well. So you ask for a picture. A few moments later a popup or something notifies you that so and so is sending you a file. The moment you accept that file, the person sending can send ANYTHING they want along with that picture. Anything from keyloggers and Trojans to malware and scumware.
Another way to get yourself into trouble is Email. There are 419 scams all over the place. One of the best ones I've seen is an email stating that "your order has been processed and thanks for the $1,250.98 credit card payment. Please click here to check the status or to contact us." At this point, if the site is still up, there will be a form you can fill out where you enter your credit card and/or social security number to verify the fake transaction. Once you do this, your money is GONE! Or perhaps, if you're running Microsoft's Internet Explorer, a little program gets installed that looks for financial data and then sends that data to the bad guys. The point here is to know who you are doing business with on the web. If it's too good to be true, IT IS!

Running Windows as an Administrator
If you took your PC out of the box, plugged it in and turned it on, you're logged on to that computer with the user name of Owner. This user has Admin Rights under Windows XP - you need to do two things. Create a new user in Windows XP with limited rights and Update Windows. Windows Update is on the Start menu - just follow the steps.
Next thing to know is that the Administrator account for Windows XP does not have a password by default. So, please change the Administrator password in Windows XP. In Windows XP Professional, from the Start menu, right click on the My Computer icon. Choose Manage. Expand "Local Users and Groups" and highlight "Users". In the right pane, right click on the user Administrator and choose "Set password..." The password should have at least one special character (like @, $, %, &, etc) and one number. Use a paraphrase to help you remember like: My Silly 12th Grade Teacher Had 1 Fine @ss So the password would be MS12GTH1F@
You get the drift.
...

http://tazforum.thetazzone.com/viewtopic.php?t=3335

[Bullishreturn]

GovExec.com

DAILY BRIEFING
January 24, 2007
Thrift Savings Plan executive director resigns

By Karen Rutzick
krutzick@govexec.com

Gary Amelio is leaving his post as executive director of the Thrift Savings Plan for a private firm, plan officials announced Wednesday.

Amelio, who came to the TSP in 2003 and oversaw the 401(k)-style retirement savings vehicle's growth to $206 billion, will become president of retirement services for ULLICO, Inc., which provides insurance and investments for union members.

The TSP has already hired executive search firm Heidrick & Struggles to find a replacement for Amelio.

Amelio's most significant accomplishment was the introduction of lifecycle funds to the TSP in August 2005. The funds automatically shift money from a mix of riskier to more conservative investments as participants age. The TSP has five standard funds.

TSP Board Chairman Andrew Saul, one of five part-time political appointees who hired Amelio in 2003, said the director fulfilled expectations.

"The board members and I knew that Gary's private sector retirement services experience was just the right recipe for leading the already successful TSP to the next level," Saul said in a statement. "We were not disappointed."

Before coming to the TSP, Amelio was senior vice president of the retirement division of PNC Bank in Pittsburgh.

Amelio reduced the TSP's budget to make the plan cheaper for participants. TSP participants pay 30 cents for every thousand dollars in the plan, by far the lowest rate of any 401(k)-style plan.

During his tenure, Amelio clashed with some members of Congress who wanted the TSP to add a Real Estate Investment Trust fund option to the plan. Amelio bristled at the idea that politics would play a role in determining which funds to add, and has so far stalled the addition of such a fund.

This document is located at http://www.govexec.com/dailyfed/0107/012407r1.htm

[Bullishreturn]

From today's GOVEXEC.COM:


TSP officials see 'huge growth' in plan

By Brittany R. Ballenstedt
bballenstedt@govexec.com



Officials of the Thrift Savings Plan on Wednesday said the plan's already low cost to participants could drop even more in the future.


Board officials also predicted that investments in the plan, which currently stand at $206 billion, could grow to $300 billion in three years.


"Going forward, we must be cognizant of the huge growth this plan is going to undergo in the next three or four years and in the future," said board Chairman Andrew Saul at a special biannual meeting of the Employee Thrift Advisory Council

(more: http://govexec.com/story_page.cfm?articleid=36083&dcn=todaysnews )

[tsptalk]

TSP officials see 'huge growth' in plan

By Brittany R. Ballenstedt
bballenstedt@govexec.com

Officials of the Thrift Savings Plan on Wednesday said the plan's already low cost to participants could drop even more in the future.
I don't know how many times people told me that TSP will raise their fees because of our "irresponsible, active" approach. This proves otherwise. If anything we've should be thanked for increasing the popularity and awareness of the TSP which seems to be the reason for the lowered fees. We'll never hear anybody say that though.

[Bullishreturn]

Auditors stress importance of data security to TSP officials

By Brittany R. Ballenstedt
bballenstedt@govexec.com

Data security should continue to be an ongoing concern for Thrift Savings Plan officials, according to Labor Department auditors.

Reviewers from Labor's Employee Benefits Security Administration told TSP officials during a monthly meeting Tuesday that there were no instances in fiscal 2006 of "material noncompliance" with the Federal Employees' Retirement System Act, the law that authorized the TSP in 1986. But they said plan officials should focus on updating and approving TSP's security strategy, based upon the most recent risk assessment.

( More at http://govexec.com/story_page.cfm?articleid=36163&dcn=todaysnews

[Bullishreturn]

The full article:

Auditors stress importance of data security to TSP officials

By Brittany R. Ballenstedt
bballenstedt@govexec.com

Data security should continue to be an ongoing concern for Thrift Savings Plan officials, according to Labor Department auditors.

Reviewers from Labor's Employee Benefits Security Administration told TSP officials during a monthly meeting Tuesday that there were no instances in fiscal 2006 of "material noncompliance" with the Federal Employees' Retirement System Act, the law that authorized the TSP in 1986. But they said plan officials should focus on updating and approving TSP's security strategy, based upon the most recent risk assessment.

"There is always going to be a need for ongoing security upgrades, and it is always going to be a part of our focus here at the board," said James Petrick, TSP's chief financial officer, in his response to the audit.

EBSA is responsible for regularly auditing TSP and determining its level of compliance with the requirements of the 1986 law.

Data security concerns have increased after hackers breached the accounts of some TSP participants in late December and stole $35,000. Outgoing TSP Executive Director Gary Amelio reacted to the breach at a special TSP meeting last month, noting: "We've become so efficient with technology that technology is destroying us."

TSP houses names, Social Security numbers and addresses on about 3.6 million current and former federal employees who have invested more than $180 billion in retirement savings through the system. Mark Hagerty, the plan's chief information officer, said in June 2006 that he wanted to expand TSP's security measures by enabling participants to switch to using account numbers, rather than Social Security numbers, to access their TSP accounts online. But that change has yet to be made.

EBSA auditors also highlighted a recent report that assessed TSP's plan for disaster recovery, stressing the need for an improved ability to continue operations in the event of an emergency. They recommended that a risk assessment be conducted at the TSP's disaster-recovery site in Pittsburgh, and noted this is the next audit they have planned this year.

The auditors outlined other plans for 2007, including investigating the full scope of computer access security and initiating a special project on data security vulnerability.

Meanwhile, TSP officials and Labor auditors stressed the need to beef up efforts to promote the TSP to the military services. Audit reports indicate that members of the Marine Corps and the Army have the lowest rates of participation in the plan.

Pamela Jeanne Moran, TSP's director of participant services, attributed the results to the fact that the country is at war, with soldiers and Marines focusing their attention on the mission at hand rather than benefits issues.

Auditors recommended that TSP strengthen its procedures for training personnel responsible for educating service members about the benefits of the plan.

During the Tuesday meeting, TSP officials also said their farewells to Amelio, who came to the plan in 2003 and oversaw the 401(k)-style retirement savings program's growth to $206 billion. He left TSP to become president of retirement services for ULLICO Inc., which provides insurance and investment products and services for union members.

http://govexec.com/story_page.cfm?articleid=36163&dcn=todaysnews

[Bullishreturn]

GovExec.com

DAILY BRIEFING
February 28, 2007
TSP activity increases following stock market plunge

By Amelia Gruber
agruber@govexec.com

Investors in the government's 401(k)-style retirement savings plan showed some signs of shaky nerves after the steep drop in the Dow Jones industrial average Tuesday.

The Thrift Savings Plan Web site experienced increased traffic as participants checked their accounts, and the number of transfers among funds processed Tuesday night reached the fourth-highest level so far this year, said TSP spokesman Tom Trabucco.

The TSP processed 12,627 interfund transfers overnight, Trabucco said. Though that is well short of the highest number of transfers in 2007 -- 16,393 on Jan. 3 -- it is still a "pretty big number," he said, noting that there tend to be more transfers at the beginning of the year, because it is a standard time for participants to reallocate their investments.

Most of the transfers Tuesday night represented movement out of the three basic TSP stock funds and into the less risky G and F funds, which invest in government securities and fixed-income bonds.

Participants took $200 million out of the I Fund, which invests in international stocks. The fund closed at $22.67 Tuesday, down $0.74 from the previous close and up 0.71 percent for the month. Investors took about $109 million out of the C Fund, which tracks the Standard & Poor's 500 Index of stocks in the largest domestic companies. It closed at $15.53 Tuesday, down $0.55 from the day before and 2.51 percent for the month.

They also transferred about $109 million out of the S Fund, which invests in small- and mid-sized companies by tracking the Dow Jones Wilshire 4500 Index. It finished Tuesday at $19.24, down $0.65 from the previous day and 0.57 for the month.

Of the total amount moved out of these funds, about $370 million went to the G Fund, which did not change Tuesday and was up 0.34 percent for the month, and about $49 million flowed to the F Fund, which changed very little Tuesday and was up 1.71 percent for the month.

TSP officials, however, recommended against shifting money in response to short-term market fluctuations.

"We always advise participants to have a long-term investment horizon and to stick with that plan over the long term," Trabucco said.

Plan participants who are uncomfortable with the movement in the markets should consider placing their money in the life-cycle (L) funds, which invest in a mix of the basic funds that grows more conservative as employees near retirement age, he said.

Trabucco expects activity to remain elevated Wednesday. He said investors may have trouble logging on to their accounts on the TSP Web site, and if they do, they should try the TSP's toll-free phone number: 877-968-3778.

As of Wednesday afternoon, the markets were rebounding somewhat. The Dow Jones was up about 0.7 percent after a more than 3 percent drop Tuesday, and the S&P 500 was up about 0.8 percent, also on the heels of a more than 3 percent plunge. Tuesday's decline -- the steepest in about four years -- was precipitated by a drop in Chinese stocks.

This document is located at http://www.govexec.com/dailyfed/0207/022807a1.htm
(http://www.govexec.com/dailyfed/0207/022897a1.htm)

[Gilligan]

...Of the total amount moved out of these funds, about $370 million went to the G fund....

This document is located at http://www.govexec.com/dailyfed/0207/022807a1.htm
(http://www.govexec.com/dailyfed/0207/022897a1.htm)

Looks like the majority went out of stocks when they should have gone back into stocks, and at the end of the year they wonder why they have lost money.

[Spaf]

Looks like the majority went out of stocks when they should have gone back into stocks, and at the end of the year they wonder why they have lost money.

Maybe they were absent when the FERS Briefing was presented?....NOT!

Gilligan, quite hitting the nail on the head....it hurts!....:cheesy:.....Poor nail!

If U would stop hitting it I'm sure the nail would feel much better!.....;)

[tsptalk]

Looks like the majority went out of stocks when they should have gone back into stocks, and at the end of the year they wonder why they have lost money.
A lot of people paniced but they may be rewarded because the worst is not over. It's the one's who wait a week or two when they finally realize they lost money, that will get burned.

[Wheels]

Looks like the majority went out of stocks when they should have gone back into stocks, and at the end of the year they wonder why they have lost money.

And now a few hours later, it looks like the majority got out of stocks exactly when the should have and many of us "traders" are jumping back in too early.

[tsptalk]

Yesterday's bounce was a gift to those who bailed Tuesday night/ Wednesday morning. We talk about the deadline and how it can take 2 days to bail. When things got really bad on Tuesday is was setting up for one of those 2 day bashings that beat a TSP interfund transfer. But yesterday's rally turned out to be a reprieve as some were able to get out, and get out at higher prices. They got lucky.

[Gilligan]

Tom,
you did a good job in picking out the bottom last June, we will have to watch and see if this is the bottom or not.

[tsptalk]

I have a feeling it's not the bottom, but we may be able to scalp a small rally here and there if we're quick.

[Bullishreturn]

Here is an article that appeared Friday on fedsmith.com

http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1181

[Bullishreturn]

Tom,
you did a good job in picking out the bottom last June, we will have to watch and see if this is the bottom or not.


Not the bottom yet. Here is what I see.

See the chart for the S&P 500. Do you see how the majority of the day it is falling, and even when it started to reverse, then, just before the close, you see the big move downward again?

that is a sure sign that we're going to continue going down. I'd say, if we are really looking at the 10% pullback, that we will see the following points of resistance on the way down:

1380-1382- There is some resistance here. However, I think we'll go through that one on the way down in the next day or two.

1360-1364- Another resistance point. We might bounce off that one two times, and then settle out flat for a little bit. If we do, then lots of people will jump back in here, but I think if they do, they will be sorry.

1320-1325- Another resistance point, and indicative of the 10% pullback range. If it makes it down this far, I think there is a LOT of reinforcement to hold it there. If it makes it down to the 1320-1325 range, then I'm back in, dabbling 10% or 20% each day it's in that range, until I'm fully invested again. .

[Gilligan]

The Honey Pot

By Karen Rutzick

The Thrift Savings Plan has grown into a $200 billion retirement behemoth, but its nearly 4 million participants might be surprised to learn how their money is managed.

http://www.govexec.com/features/0307-15/0307-15s1.htm

[tsptalk]

The Honey Pot
By Karen Rutzick

http://www.govexec.com/features/0307-15/0307-15s1.htm

Do you see those 3 "related links" on the right side of that page?

The Zealous Web Guy (http://www.govexec.com/0307-15/0307-15s1s1.htm)

The Long-Timer (http://www.govexec.com/0307-15/0307-15s1s2.htm)

The Newbie (http://www.govexec.com/0307-15/0307-15s1s3.htm)

I think that will be me, wheels and the new TSP person they interviewed. They should be available soon. Right now the links are broken.

[FundSurfer]

The Newbie was available....

[VirginiaBob]

the newbie is up now.

[Bullishreturn]

TSP board picks insider as new director

By Amelia Gruber
agruber@govexec.com

The head of research and product development for the Thrift Savings Plan has been selected to serve as the next director of the 401(k)-style retirement savings program for federal employees.

In a meeting Monday that was closed to the public, the board that oversees the TSP unanimously elected Gregory Long as the $210 billion plan's chief executive officer and managing fiduciary. Long will step into the position vacated by Gary Amelio, who left the TSP last month to become president of retirement services for ULLICO Inc.

Long served as the TSP's director of product development for the past year. He managed the first survey of plan participants' attitudes in 15 years, and recently completed a separate report on demographics and investment behavior.

Before joining the TSP, he spent seven years in marketing at CitiStreet, a benefits firm, and worked six years at Putnam Investments. His "blend of recent TSP service and private sector experience is exactly the right recipe going forward," said Andrew Saul, the board's chairman, in a statement.

TSP used the executive search firm Heidrick & Struggles to help find the new director.

Long will inherit a plan that is expected to grow to hold as much as $300 billion in investments within three years. One major focus will be increasing military members' participation in the plan, which has reached a plateau in terms of civilians enrolled.

Dan Adcock, assistant legislative director for the National Active and Retired Federal Employees Association, said he has yet to meet Long, but looks forward to working with him. NARFE is among the employee groups on a council that advises the TSP board.

The group has several agenda items. For instance, when Congress changes policies for private sector 401(k) plans, NARFE will continue to encourage the TSP board to look into similar changes for the federal program, Adcock said.

But NARFE's "main concern is that the [members of the] thrift board continue to be diligent fiduciaries as they have been," Adcock said.

This document is located at http://www.govexec.com/dailyfed/0307/032007a1.htm

[Bullishreturn]

March 19, 2007
TSP boosts participation of young, lower-paid employees

By Amelia Gruber
agruber@govexec.com

Younger civilian workers and those at the lower end of the pay scale are participating in the government's 401(k)-style retirement savings plan at increasing rates, according to newly compiled demographic data.

This is good news because these tend to be the groups where it is hardest to boost participation, said Greg Long, director of product development for the Thrift Savings Plan, in summarizing the data for board members at a meeting Monday. The report focuses on full-time civilian employees and covers the period from 2000 to 2005.

TSP participation rates for Federal Employees Retirement System workers younger than 30 rose from 76.3 percent in 2000 to 83.8 percent in 2005, the report stated. For FERS employees in the lowest-paid quintile, it increased from 75.7 percent in 2000 to 78.8 percent in 2005.

FERS is the newer of two retirement systems for federal employees, and is more dependent on TSP contributions than the older Civil Service Retirement System.

With the exception of these groups, participation rates among civilians topped out at about 88 percent for full-time employees in FERS over the five-year period. This comes on the heels of steady growth in the 1990s, the report said.

The recent civilian participation rates are about as high as can be expected, leaving the military as a key place to concentrate any efforts to expand, TSP board officials said. The services for the most part do not offer to match employee contributions, making participation less enticing.

One exception is an Army pilot project to match contributions of some soldiers at the same rate as that enjoyed by FERS participants. The project is meant to boost recruitment in hard-to-fill specialty posts, and the matching funds only are available to soldiers who enlist in such posts for five years or more. So far, 3,309 soldiers have signed up.

The demographics and behavior report also noted that civilian TSP participants have increased the average percentage of pay they contribute. For FERS employees, the average rate grew from 7.1 percent in 2000 to 8.6 percent in 2005. For CSRS employees, it rose from 4.4 percent to 7.5 percent. Those rates are higher than the average in the private sector, Long said.

The growth is partly attributable to an increase in maximum allowable contributions, the report said. The ceiling for contributions as a percentage of pay increased from 10 percent in 2000 to 15 percent in 2005 for FERS employees, and from 5 percent to 10 percent for those in CSRS.

Beginning in 2002, participants age 50 and older were allowed to make "catch-up" contributions above these limits, also contributing to the growth.

The G Fund, which invests in government securities and is less risky than other plan offerings, and the C Fund, which tracks the Standard & Poor's 500 Index of stocks in the largest domestic companies, were the most popular options across all age groups, according to the demographic report.

TSP officials noted at the meeting that participants appear to be responding to the recently volatile stock market with a high volume of trading. Trading in the international stocks (I) fund was especially expensive, at 24.3 basis points -- or $2.43 for every $1,000 invested -- for the month of February.

Plan officials encourage investors to have a long-term strategy and to avoid shifting money in response to short-term fluctuations. They said they will continue to monitor trading, and will also look closely at the performance of the lifecycle (L) funds, which invest in a mix of the underlying funds that grows more conservative as participants near retirement. So far, these funds appear to have been relatively stable amid the recent volatility, officials said.

This document is located at http://www.govexec.com/dailyfed/0307/031907a1.htm

[swsop]

TSP to assess capacity to handle stock market plunges

Officials overseeing the Thrift Savings Plan should be sure they are prepared to handle an increased volume of transactions in the event of a major market plunge, members of the retirement plan's board said at a meeting Monday.

TSP officials noted that following the stock market drop in late February, about 10 percent of participants with investments in the 401(k)-style plan's International (I) Fund made changes. Though the market recovered quickly, board Chairman Andrew Saul said the plan must be prepared to deal with a major influx of transactions.

"We have to make sure we are building ourselves up structurally for increased volume and increased participants," Saul said. "God forbid that we have a major world event…we really have to plan for this."

Swsop
Full story: http://www.govexec.com/story_page.cfm?articleid=36626&dcn=e_gvet

[Bullishreturn]

Looks like a reprint of the earlier article is now up on govexec.com website today:


RETIREMENT PLANNING
April 20, 2007
Honey Pot

By Karen Rutzick
krutzick@govexec.com

Editor's Note: Columnist Tammy Flanagan will return next week. In the meantime, you might be interested in a feature written by Karen Rutzick on the inner workings of the Thrift Savings Plan. The story first appeared in the March 15 issue of Government Executive.

On Oct. 17, 2006, Terry Duffy made an $8 billion purchase. Duffy, executive chairman of the Chicago Mercantile Exchange, bought the Chicago Board of Trade. His move made the Merc, as it is called, the world's largest financial exchange, overtaking the New York Stock Exchange. So it is easy to understand why on Oct. 16, Duffy was busy - too busy, it turns out, to attend the monthly meeting to oversee the federal Thrift Savings Plan, of which he is a board member.

It wasn't his first absence.

In their spare time, Duffy and four fellow TSP board members oversee the $200 billion retirement plan. Nearly 4 million people -- federal employees, retirees and members of the uniformed services -- are saving money in the TSP, which functions like a 401(k) with up to 5 percent matching contributions from the government.

Congress created the plan in 1986 as part of the new Federal Employees Retirement System. Until then, employees had received a set pension based on their salary and the number of years they worked under the Civil Service Retirement System.

But CSRS, whose benefits were not portable, locked employees in golden handcuffs. To build their nest eggs, they had to remain employed with the federal government. FERS reduced the amount of pensions, added Social Security benefits to the package and created the TSP, which is portable.

Government automatically contributes 1 percent of employees' pay to the TSP and matches their contributions dollar for dollar up to 3 percent, and 50 cents on the dollar for an additional 2 percent of salary. CSRS employees can participate in the TSP, too, but they don't get matching funds.

As Sen. Richard Durbin, D-Ill., noted during Duffy's May 15, 2003, confirmation hearing: "The Federal Retirement Thrift Investment Board may be obscure to some, but it is not to the millions of federal retirees and current federal employees who are saving a portion of their earnings in anticipation of retirement."

Duffy responded in kind: "I understand the gravity of the responsibilities that I will be required to fulfill if my nomination is approved. Three million federal employees have invested more than $100 billion to assure a successful and productive retirement."

Four years later, the TSP has more than doubled its worth, but Duffy has been to Washington only four times to oversee it. Since Duffy's 2003 appointment -- he was the last of the five current board members to join -- the board met 42 times through the end of 2006. Twenty-nine of those meetings were face to face; 13 were telephone conferences. Duffy attended 25 of the 42. But for 21 of the 25, he phoned in from Chicago. Minutes from the meetings show that when he did phone in, he remained mostly silent.

Duffy declined to be interviewed for this story, but through a TSP spokesman -- who tracked Duffy down "in a car on his way to an airport somewhere in the world" -- he said, "As far as [my] attendance record, the record is the record."

TSP board members are simultaneously open and elusive. Membership is part time; last year, pay ranged from $4,000 to $22,000, because travel and preparation times varied. Most members are successful businessmen and large political donors. They are both private and public figures. Law requires them to conduct the monthly meetings in public, which they do, but all five board members and the executive director refused requests for interviews about Duffy's record, or the TSP in general.

Former board member Sheryl Marshall, appointed in 2000 by President Clinton, says the meetings are scheduled a year in advance to accommodate schedules. "It's just a responsibility, it's a fiduciary responsibility," Marshall says. "If you're not going to show up, you shouldn't be on the board."

Similarly, Marshall's fellow former board member and Clinton appointee Scott Lukins says, "That's where we did most of our decision-making -- all of it was made at these meetings. . . . You can't be giving your share if you're not attending the meetings."

Luckily for the 3.7 million TSP investors, Duffy's absenteeism is uncommon. By contrast, the other board members have near-perfect attendance records and travel to Washington for most meetings.

Chairman Andrew Saul and member Gordon Whiting live in New York; Alejandro Sanchez is from Florida and Thomas Fink is in Alaska. Saul, Whiting and Sanchez were appointed in 2002; Fink in 2000. They have presided over big changes to the plan -- and some big battles.

High Drama

The new board's very first meeting, in December 2002, was fraught with high drama. The month before, Roger Mehle, the longtime executive director, resigned to return to private law practice. He recommended James Petrick, an attorney and 16-year TSP employee, as his successor.

The previous board approved him for the lifetime appointment. But when the Bush-appointed board convened in Washington that December, Saul, Whiting, Sanchez and Fink forced Petrick to resign.

Their reasoning is not entirely clear. A transcript is among court documents from a lawsuit filed against the board by Mehle and the TSP's original executive director, Frank Cavanaugh, in the U.S. District Court for the District of Columbia. According to the transcript, Saul said that shortly after he was confirmed, Petrick called him at his Westchester, N.Y., home and spoke rudely to him, telling him not to talk to TSP staff without Petrick's permission. Saul also said six senior staff members told him they would quit rather than work under Petrick.

Mehle has his own theory. Saul's board hired Gary Amelio, former senior vice president of the retirement division of PNC Bank in Pittsburgh, as executive director. A month after Amelio's arrival, he and the board accepted a $5 million settlement with a contractor to close out the botched modernization of the TSP's computer system.

Under Mehle, who resigned in November 2002, the board had paid Fairfax, Va.-based American Management Systems $36 million for the failed modernization. Mehle and his board sued AMS, beginning a turf battle with the Justice Department over whether the board had standing to sue. Petrick was committed to the lawsuit, but Saul wanted to settle and Amelio agreed.

Whatever the reason, that December, the board handed Petrick a resignation letter and told him to sign it and return to his old job at the TSP or be fired. Petrick had just minutes to decide. He resigned.

Mehle a former Treasury Department assistant secretary under President Ronald Reagan, was chairman of the TSP Board from 1986 to 1994 and stepped down to become executive director. He is passionate about the lawsuit, which essentially alleges that the board violated its fiduciary duty to TSP participants by forcing out Petrick in order to settle the AMS lawsuit.

"[I] regard the things that were done as terribly abusive of the appropriate governance of the organization," Mehle says. He expects the judge to rule this year.

Amelio is now gone -- he left in January for a job as president of retirement services for Ullico Inc. of Washington, which provides insurance and investments for union members. The board selected Gregory Long, who served as the plan's director of product development for a year, as Amelio's replacement.

At his last board meeting, Amelio promised to support his successor. "I'm not going to be filing any fruitless litigation," he says.

In any case, the TSP that faces Long is vastly different from the one Amelio inherited.

Era of Change

Amelio and the board quickly ended the contractor lawsuit and ushered the TSP into an era of change. The biggest development since the plan's inception 20 years ago has been the switch to computerized records, allowing participants to move their investments every day.

After the system went online in mid-2003, Congress ended the two annual TSP open seasons and permitted participants to move their investments among funds at any time. As Saul said in a February 2007 meeting, daily valuation is "the heart of the whole change."

(MORE IN NEXT POST)

[Bullishreturn]

(GOVEXEC.COM Article- continued:)

But there's more. The TSP already was the cheapest plan in the country, by a long shot. Last year's annual administrative fee was only $3 for every $10,000 invested, or three basis points. In February, Amelio predicted it soon would drop to one basis point. By contrast, the fee for the least costly 401(k), Vanguard, is 22 basis points.

Federal agencies bear some of the administrative costs. But the cost reduction also is due to the board's aggressive outsourcing of administrative functions. By May 2006, TSP had entirely dropped the Agriculture Department's National Finance Center in New Orleans as its data entry, accounting and call center provider. Instead, it hired contractors SI International of Reston, Va.; Spherix Inc. of Beltsville, Md.; and Switch & Data of Tampa, Fla.

Amelio reduced the operating budget from $101.5 million in fiscal 2004 to $76.8 million in fiscal 2007 by outsourcing and downsizing staff through buyouts.

He also presided over the entry of hundreds of thousands of new participants. The 2001 Defense Authorization Act permitted uniformed members of the military to use the TSP, though by and large they don't get a matching contribution. They also have their own pension system, so a smaller portion of them -- about 500,000 out of 2.5 million, or 20 percent -- contribute to the TSP. Among civil servants in FERS, 85 percent participate, as do about 65 percent of those in CSRS.

In August 2005, TSP officials launched a set of new investment options called life-cycle funds. Celebrated for its simplicity, the TSP had had just five basic options.

The G Fund invests in government securities specially issued to provide a higher return than inflation without any serious risk from market fluctuations. The C Fund invests in common stocks, tracking Standard & Poor's 500 Index of stocks in the largest domestic companies. The S Fund invests in small- and mid-sized domestic companies, following the Dow Jones Wilshire 4500 Index. The F Fund is invested in fixed-income bonds. The I Fund invests in international stocks from Europe, Australia and some Asian countries.

Life-cycle funds are a new, sixth investment option, though they're not actually a new fund. They blend the five basic funds and automatically shift investors' money from a mix of riskier to more conservative investments as participants age.

For example, for a person who plans to retire in 2040, the life-cycle fund will invest 42 percent of funds in common stocks and only 5 percent in the more conservative G Fund. On the other hand, for those headed for retirement in 2010, the life-cycle fund will invest 43 percent in safe government securities and only 27 percent in more volatile common stocks.

Federal employees tend to be conservative investors. Those in FERS put an average of 9.4 percent of salary into the TSP and even those in the older CSRS tuck 9.2 percent into the plan. But they favor low-risk funds. About 44 percent of TSP dollars sit in the G Fund. At the end of 2006, 18 months after their introduction, the life-cycle funds had 433,025 participants and held $17.4 billion, roughly 8 percent of the TSP total.


Power Play

Only Congress can add funds to the plan, but since 1986, lawmakers have done so only at the suggestion of the board. Last year saw a major clash between Congress and the board when more than 200 House members tried to force a Real Estate Investment Trust Fund into the TSP without the board's approval.

They failed when the board ran out the clock on the 109th Congress by hiring an outside consultant to examine the REIT option. Congress couldn't vote to add the fund until the experts had given their verdict. The firm, Ennis Knupp & Associates of Chicago, didn't issue its report until a couple of weeks after the Nov. 7 election.

The Bush-appointed board's assertiveness, revealed in its handling of Petrick, has played out in its aggressive moves to diversify the plan and reduce costs. Amelio, the former executive director, personified this combativeness. At one of his last public appearances with the TSP, while insisting he was leaving for career and financial opportunities, he said: "One of your august members suggested I was getting frustrated with doing battle with the bullies on the Hill. I relish doing battle with bullies, particularly those that have no idea what they're doing."

The "bullies" to whom he referred include Congress members such as Tom Davis, R-Va., ranking member of the House Government Reform Committee; Jon Porter, R-Nev., ranking member of its federal workforce subcommittee; Danny Davis, D-Ill., its chairman; and Chris Van Hollen, D-Md., chairman of the Democratic Congressional Campaign Committee.

Those congressmen -- after intense lobbying by the National Association of Real Estate Investment Trusts -- supported legislation to make a REIT the sixth fund in the TSP.

They argued that REITs, which allow individuals to buy shares in companies that run apartment buildings, shopping centers, offices, hotels and other commercial facilities, are big earners and that federal employees should have the choice, as do many 401(k) participants, to invest in them. REITs also react differently to market forces than do stocks and bonds, providing diversification, which protects assets, the lawmakers argued.

But board members bristled at the attempt to overpower them. They argued that if Congress imposed a REIT fund, then other interest groups would lobby to add funds. A proliferation of funds could raise administrative costs and reduce participation levels, they said.

The battle led to contentious hearings and a heated exchange of letters. So far, no REIT bill has been introduced in the new Congress.

Meanwhile, the board has its own plans. Members are expected to ask the new Congress for more changes, among them, automatic enrollment of all new employees in the TSP and the designation of the life-cycle funds as the default investment for new participants. Saul predicts the plan will grow to $300 billion in three years.

This document is located at http://www.govexec.com/dailyfed/0407/042007rp.htm

[Tempest]

TSP is one SWEET retirement plan. When I describe it to some friends they can't believe it.

[swsop]

Riskier TSP funds bring greatest gains for May

Small and common stocks, two of the riskier fund options in the Thrift Savings Plan, led the pack for earnings in May, while only fixed-income bonds lost ground. The S Fund, which invests in the stocks of small- and mid-sized American companies, grew the most, at 4.40 percent last month. The fund tracks the Dow Jones Wilshire 4500 Index, which invests in the 4,500 next-largest domestic companies after the 500 tracked by the common stock, or C Fund. May's growth brought the S Fund's 12-month gains to 21.89 percent.

The C Fund, which tracks Standard & Poor's 500 Index, was the second highest earner, with gains of 3.52 percent last month. Its 12-month gain was 22.81 percent. The international, or I Fund, which invests in stocks in Europe, Australia and some countries in Asia, grew 2.54 percent in May. The fund had the highest 12-month gains, however, coming in at 26.92 percent.

The government securities (G) fund, which is the most reliable, earned 0.34 percent last month for a yearlong 4.92 percent increase. The F Fund was the lone loser among the five basic options for May, dropping 0.70 percent. The fund, made up of fixed-income bonds, still had positive 12-month earnings, at 6.71 percent.

All of the TSP's life cycle fund options, which automatically adjust to more conservative allocations as investors near their target retirement date, saw gains last month. The funds designed for younger employees grew the most, because they are the most heavily invested in funds that are riskier but also have greater earnings potential. The L 2040 fund, designed for TSP participants anticipating retirement around the year 2040, grew 2.79 percent in May. The L 2030 Fund gained 2.52 percent; the L 2020 rose 2.15 percent; the L 2010 increased 1.53 percent; and the L Income, designed for employees with planned retirements in the very near future, gained 0.92 percent. The L funds with riskier allocations also earned more over 12 months. L 2040 gained 20.92 percent, L 2030 grew 18.87 percent, L 2020 gained 16.85 percent, L 2010 earned 12.79 percent and L Income made 8.64 percent.

COMMENTS

Risk is all relative. The equity options offered by the TSP program may seem "risky" in comparison to the other options (F fund, G fund, and the Lifecycle choices), but, being an index of companies, they have less risk than a stock based mutual funds, and dramatically less risk than owning selected individual equities. I would categorize the "S", "I", and "C" as "moderate risk" or "equity market risk" (i.e., the risk associated with being invested in the overall stock market) when looking at the universe of investments options avaialable to investors outside the TSP plan.

Swsop

[Bullishreturn]

Employee groups back automatic TSP enrollment, new default fund

By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com) June 12, 2007

A federal Thrift Savings Plan advisory panel decided Tuesday to back legislation allowing for automatic employee enrollment in the plan and to change the default fund for indecisive investors.
At a biannual meeting of the Employee Thrift Advisory Council, representatives from labor unions and other federal employee groups expressed support for the proposed changes to the 401(k)-style program on the grounds that both would be beneficial to participants.
Under the 2006 Pension Protection Act, Congress gave public and private sector organizations the ability to offer an "opt out" approach to 401(k) plans. The law allows organizations to automatically enroll employees into such plans unless they indicate otherwise.

TSP officials originally designed the proposal to offer a 90-day period for employees to opt out. But TSP Executive Director Gregory Long said agency responses to this time frame were negative, triggering officials to modify the proposal to provide enrollment immediately. Employees could later choose to get out, he said.

Long said the default contribution for automatic enrollment would be 3 percent, largely because employee contributions are matched fully up to 3 percent.

A representative from the National Treasury Employees Union indicated that the legislation should give TSP officials the flexibility of changing the default contribution, should 3 percent not prove to be the best option. "After some experiences down the road, you may have to go back to Congress and get a legislative change," he said. "That way, you don't have to go back to Congress if you discover that 3 percent isn't the right level."

Another proposed change involves switching the default fund for investors who do not express a preference from the less-risky government securities fund to the TSP's life cycle options, which invest in a more conservative mix of funds as employees near retirement.
TSP officials noted that employees who do express a preference are most likely to choose the L funds, warranting the change. But representatives of the groups indicated that changing the default fund would require increased outreach to alert employees to the risks of investing in the L funds.

"We will let people know that if they don't make a choice, [money] will go into the L funds, and that does involve some risk," Long said. "The best long-term effects are in the L Funds."

Representatives unanimously agreed that the default fund proposal would be beneficial. "Looking back on it now, knowing the advantage of diversifying investments, I support taking the default to the age-adjusted L funds," said Richard Strombotne of the Senior Executives Association.

Meanwhile, TSP officials and group representatives agreed to hold off on three other potential changes -- the addition of a Roth option, the allowance of contributions from bonuses and the addition of restrictions on where funds are invested.
Long indicated that offering the Roth option, which would allow employees to make after-tax contributions, would benefit a very small percentage of participants. "If you expect your tax rates in retirement are going to be higher when you retire than now, then it makes sense," Long said. "But that's not most people."

Long said he believed that given the internal costs of such an option to the TSP, and some agency concerns over increased payroll costs associated with the Roth option, it would be best to "wait a few years and revisit the issue at that time."

The president's 2008 budget request included a proposal that would allow employees to contribute bonus money to the TSP. "I don't see a lot of benefit for employees having this particular benefit right now, given the fact that they go right up to the [Internal Revenue Service] limit, which is $15,500 with a catch-up provision of another $5,000 for those age 50 and above," Strombotne said.

The council also determined that six different pieces of legislation recently introduced to divest funds that support terrorism in Iran and genocide in Darfur, Sudan, were not in the best interest of all participants. "Putting restrictions on funds of where employees should invest their money is not our business," said James Sauber, chief of staff of the National Association of Letter Carriers and chairman of the council.

Officials and employee representatives agreed to revisit the issue of divesting funds. In the meantime, they said, employees can make their own choices as to where to invest. "Just like if you don't like doing business at a particular store, you don't go there," said Richard Brown, president of the National Federation of Federal Employees.

The council also re-elected Sauber as chairman and Brown as vice chairman. Both are four-year appointments.

TSP spokesman Tom Trabucco said officials would discuss the automatic enrollment and default fund proposals with the TSP board next week. "We should get things rolling in the near term," he said.

Source: http://govexec.com/story_page.cfm?articleid=37164&dcn=todaysnews

[Bullishreturn]

Survivor Savings

By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com) June 14, 2007

There's little doubt that the Thrift Savings Plan is a highly valued and attractive (http://www.govexec.com/dailyfed/0607/060807b2.htm) investment program for federal employees. But should participants pass away, their spouses might not see the full benefits.

Currently, a surviving spouse beneficiary must either accept the assets of the TSP account as a lump sum, with the tax consequences, or have the assets transferred to a rollover Individual Retirement Account. But one representative of the TSP's Employee Thrift Advisory Council is hoping to change that rule.


Richard Strombotne -- who represents the Senior Executives Association at ETAC meetings -- is seeking the council's support for a proposal that would allow spouses of deceased federal workers to leave their savings in the plan.


"Because the TSP is run so efficiently, the administrative costs are so low," Strombotne said. "Even though the surviving spouse can move the funds, there is a loss of economic benefit in that process. It's a disadvantage for a surviving spouse to find another place to invest the money."


The TSP is not the only retirement fund with such a rule, however. Regulations governing private sector 401(k) plans are so burdensome that the managers of these accounts often decline to offer surviving spouses the benefit of leaving savings there, Strombotne said.


But the regulations governing private sector IRAs are such that the transfer of ownership to a surviving spouse is relatively easy, making that procedure a routine action, Strombotne noted. He said he believes that the same "ease of transfer" associated with private sector IRAs could be applied to the TSP.


Richard Brown, president of the National Federation of Federal Employees and vice chairman of ETAC, said Wednesday that he fears implementing the proposal would increase the administrative costs of the TSP. "That would be an administrative burden on a plan that would make everyone pay for the benefit of a few," he said. "I wouldn't support it based on that."


Typically, the TSP costs participants less than two basis points, or two cents for every $100 invested. Comparable private sector plans can cost 50 to 80 basis points.


Strombotne first offered the proposal to the advisory council in November 2004. Former TSP Executive Director Gary Amelio wasn't in favor, arguing that such a rule change was outside the TSP's hands and would require congressional action.


New Executive Director Gregory Long said Tuesday that TSP officials would look into the idea but could not promise any further action. "What strikes me as a little strange now, is this is an employer-sponsored plan," Long said. "This would make an account sponsored by someone who is not an employee of the federal government."


The proposal would need to generate support from all members of ETAC, which is composed of representatives from labor unions and other federal employee groups. The council could then propose or endorse legislation that would allow the Federal Retirement Thrift Investment Board to transfer ownership to the surviving spouse beneficiary.


If you have not designated a beneficiary for your TSP account, you can download the TSP-3 form (http://www.tsp.gov/forms/tsp-3.pdf) from the TSP Web site, or obtain the form from your agency's personnel office. But keep in mind that there are different rules governing non-spouse beneficiaries, who are subject to 10 percent withholding.


Non-spouses can defer paying taxes by transferring their death benefit payments to an inherited IRA or by taking required minimum payments based on their own life expectancy. Still, the rules governing inherited IRAs are complicated, and the TSP recommends you discuss this benefit with your tax adviser or IRA provider as you do your estate or retirement planning.



Source: Govexec.com

http://govexec.com/dailyfed/0607/061407pb.htm

[swsop]

TSP board rejects divestiture proposals

By Brittany R. Ballenstedt

The board that oversees the federal employee Thrift Savings Plan on Tuesday expressed strong opposition to legislative proposals that would require divestiture of companies that do business in countries supporting genocide and terror.

At their monthly meeting, members of the Federal Retirement Thrift Investment Board expressed concern over the precedent such proposals could create. They argued that since its creation, the TSP has acted only in the best interest of participants and has resisted efforts to advance political objectives or social goals.

Several recently-introduced pieces of legislation seek to ensure that TSP investments do not support genocide in the Darfur region of Sudan or terrorism. Board members said these proposed measures "pressure the TSP to reconsider its neutrality on political and social issues," a stand the plan has refused to take since its creation.

Full story: http://www.govexec.com/story_page.cfm?articleid=37240&dcn=e_gvet

SWSOP

[Bullishreturn]

http://govexec.com/story_page.cfm?articleid=37482&dcn=todaysnews

TSP urges Congress to back two legislative proposals

By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com)
July 16, 2007

The board that oversees the federal employee Thrift Savings Plan has sent two new proposals to Congress, urging lawmakers to adopt legislation that would allow automatic employee enrollment and to change the default fund for indecisive investors.

At a monthly meeting Monday, TSP Legislative Director Tom Trabucco said that while the proposals have been sent to Congress, no action is expected before lawmakers adjourn for the August recess.

"We're off and running," Trabucco said. "But I don't really expect much attention during this three-week period."

The automatic enrollment proposal builds off the 2006 Pension Protection Act, which gave organizations the ability to offer an "opt-out" approach to 401(k) plans. The law allows organizations to automatically enroll employees into such plans unless they indicate otherwise.

Under the proposal, new employees would contribute 3 percent of their paycheck to the TSP by default if they did not designate otherwise, but would have 90 days to withdraw their money. After that, withdrawals would be restricted but employees would be able to halt contributions.

The second proposal would switch the default fund for investors who do not express a preference from the less-risky government securities (G) fund to the TSP's life cycle options, which invest in a more conservative mix of funds as employees near retirement.

At the biannual meeting (http://www.govexec.com/story_page.cfm?articleid=37164&sid=59) of the Employee Thrift Advisory Council last month, union and employee representatives agreed that the default proposal would be beneficial, especially to younger participants.

Trabucco said Monday that it is too early to tell whether Congress will take up the proposed changes before the end of the year. "While the issues are not new to the Congress, their schedule appears to be quite full and the calendar is really quite short," he said.

Trabucco added, however, that the House Oversight and Government Reform Subcommittee on the Federal Workforce has alerted TSP officials of an Aug. 2 hearing to discuss federal employee benefits. Trabucco said Gregory Long, executive director of the TSP, has been invited to testify.

[Bullishreturn]

TSP divestiture proposals stall in committee

By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com)

July 30, 2007

Two legislative provisions that would have affected the federal employee Thrift Savings Plan by urging fiduciaries to offer socially responsible investment options stalled at the committee level.

The provisions were removed from two major bills -- H.R. 180 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.00180:) by Rep. Barbara Lee, D-Calif., and H.R. 2347 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR2347:), sponsored by Rep. Barney Frank, D-Mass. -- affecting investment in companies that do business in countries supporting genocide and terror. The House will vote on both bills Tuesday morning, according to Steve Adamske, a spokesman for Frank.

Adamske said Monday that the TSP provisions were removed largely because the Financial Services Committee does not have jurisdiction over the federal retirement plan.

A provision in Lee's bill that would have required research on the TSP's holdings in companies that do business in the Darfur region of Sudan was removed in a House Financial Services Committee markup last week.

The language would have required the Government Accountability Office to submit a report that contains the names of companies with such business interests, and the amount the Federal Retirement Thrift Investment Board, which oversees the TSP, invests in such companies.

Frank's measure would have urged the TSP to offer a terror-free investment option to federal workers, though it fell short of requiring such a fund. That provision was removed during a committee markup in May.

A similar bill (S. 1430 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:SN01430:)) sponsored by two presidential candidates -- Sens. Sam Brownback, R-Kan., and Barack Obama, D-Ill. -- still includes a provision that would urge the terror-free investment option to be offered in the TSP. That bill sits in Senate Banking, Housing and Urban Affairs Committee.

Another bill (S. 970 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:s.00970:)), sponsored by Sen. Gordon Smith, R-Ore., would require the TSP board to report to Congress on any investment in entities that engage in business with Iran. That bill sits in the Senate Finance Committee.

In June, the board supported a motion urging Congress to oppose legislation that would impose restrictions on the TSP. Board members have expressed concern over the precedent such proposals could establish, holding that Congress' original intent in creating the plan was to shield it from political and social influence.

According to a recent analysis by consulting firm Ennis Knupp & Associates, divesting the TSP's international (I) fund, which holds $24.5 billion in assets, of non-U.S. companies conducting business in Sudan would potentially result in the annual loss of 5.1 basis points, or 51 cents per $1,000 invested. This would translate to $12.5 million in additional costs annually. Divestment also would result in a one-time transition cost of $30 million, according to the analysis.

Source: http://govexec.com/story_page.cfm?articleid=37605&dcn=todaysnews

[Bullishreturn]

Officials to shore up TSP against transaction influxes

By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com) August 20, 2007

The current system that processes transactions under the Thrift Savings Plan is capable of handling increased activity from market fluctuations, but will need to be updated, TSP officials said Monday.

At a monthly Federal Retirement Thrift Investment Board meeting, officials overseeing the 401(k)-style retirement plan said that increased volatility in the markets last week led to increased transfers out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds. TSP Chief Investment Officer Tracey Ray said the movement generated $9.5 million in trading costs on Thursday alone.

Plan officials said they launched a comprehensive review of the processing system (http://www.govexec.com/dailyfed/0407/041607b1.htm) in March, following a market plunge (http://www.govexec.com/dailyfed/0207/022807a1.htm) that caused about 10 percent of I Fund investors to make changes.

Executive Director Gregory Long said that analysis and a separate review conducted by IBM found the current mainframe adequate to handle influxes of transactions. But he added that officials are developing a detailed budget plan to update the system and ensure preparedness for major market movements.

"It's not only how we plan for daily events but also for macro events," Long said. "We have put a lot of thought into our budget in planning for those particular events."
TSP officials said in April that the transaction processing system normally operates at about three-fifths of its capacity. Should the market fall significantly, the system could be turned on to full capacity, allowing it to handle four to five times the volume of transactions. Any that exceeded that amount could be delayed.

Long said officials will unveil the budget plan, review fiscal 2007 expenditures and approve fiscal 2008 funding at next month's meeting.

"It's a very tough time to be an investor," FRTIB Chairman Andrew Saul said. "We don't control the markets, but we do have to make sure the participants' money is being handled well and that they have confidence in what we're doing."


Source:
http://govexec.com/story_page.cfm?articleid=37813&dcn=todaysnews

[Jackbnimble]

This was from Mike Causey this am...Higher fees for TSP participants that exceed set number of IFTs in a year.

"Are sit-tight-grin-and-bear-it TSP investors subsidizing coworkers who frequently move money in and out of their C, S and I funds?
Transfer traffic has increased since March when the market tanked, then rebounded to record highs, then headed south again.
Should the costs associated with frequent IFTs (inter-fund transfers) be part of any increase in administrative fees to all investors?
Or should there be higher fees for investors who exceed a limited number of IFTs per year?
That is one of the issues being studied by the Federal Retirement Thrift Investment Board which is also developing a long-range plan to handle problems the TSP might face due to a large number of IFTs, terrorist attacks or weather events.
Disaster-proofing TSP operations will be the subject of a review TSP officials expect to make public within the next few weeks. The issue of whether and how much to charge so-called heavy-users is also under study. On Black Monday, a then-record $1.7 billion (that's billion with a 'B') left the stock funds. Most of the transfers were out of the international fund (I-fund) which, along with the small-cap S-fund had been producing the best returns."

[poolman]

This was from Mike Causey this am...Higher fees for TSP participants that exceed set number of IFTs in a year.

"Are sit-tight-grin-and-bear-it TSP investors subsidizing coworkers who frequently move money in and out of their C, S and I funds?
Transfer traffic has increased since March when the market tanked, then rebounded to record highs, then headed south again.
Should the costs associated with frequent IFTs (inter-fund transfers) be part of any increase in administrative fees to all investors?
Or should there be higher fees for investors who exceed a limited number of IFTs per year?
That is one of the issues being studied by the Federal Retirement Thrift Investment Board which is also developing a long-range plan to handle problems the TSP might face due to a large number of IFTs, terrorist attacks or weather events.
Disaster-proofing TSP operations will be the subject of a review TSP officials expect to make public within the next few weeks. The issue of whether and how much to charge so-called heavy-users is also under study. On Black Monday, a then-record $1.7 billion (that's billion with a 'B') left the stock funds. Most of the transfers were out of the international fund (I-fund) which, along with the small-cap S-fund had been producing the best returns."


Great... :rolleyes:

[Wolverine]

This was from Mike Causey this am...Higher fees for TSP participants that exceed set number of IFTs in a year.

Has there been any mention as of yet of the set number of IFTs or has that figure not come out yet?

[oreo]

The article also says:

The federal TSP has the lowest administrative fees in the mutual fund business. Congress intended it to be that way, partly to help feds invest for retirement and partly because members of Congress and their staffs participate in the TSP too.

IMO, if it affects Congress' pocketbooks personally, it won't happen.

http://www.federalnewsradio.com/?nid=7

[Jackbnimble]

Oreo, Think about the reverse of what you said.

I am betting in the members of congress, just like the general TSP population, that the majority of participants don't make many IFTs if any during the year. Therfore the majority of participants/congress would choose to increase fees for the minority therin reducing the fees for the majority.

In other words if the people that do numerous IFTs have to have a fee assessed to help cover the costs it would reduce the costs for the buy & hold crowd. The overall costs stay the same, just more would be assessed to the frequent traders. Which would mean less fees to the other participants.

My 2 cents.

[oreo]

Jack,

You have a point but the problem is that we really don't know exactly how many participants make IFT's during the year. It could be a lot or it could be a little. Unless we have the figures, we really don't know. However, we do know that the TSP board has been discussing capacity lately during volatility surges and I'm guessing more and more people are monitoring their accounts as the economy problems hit the mainstream media more and more.

My point is, I think it needs some analysis. I'm old enough to remember when you could only make a change once a month and the system was changed so people could have a chance to grow their funds. However, now that people are using it, they want to charge for it. I agree its not fair for the buy and holders to pay for the frequent traders. However, will charging for it harm people's accounts. I don't know but I think if it is done, it needs to be done right.

Also, my gut feeling is that not enough people are using the L-funds and this is intended to make more people users of the L-fund. Do I know this for a fact. No. But this is my suspicion.

All this being said, Jack, I don't disagree with you but I just hope that if this is done, it is well thought out. It will be interesting to see how this plays out.

Oreo

[vectorman]

I don't mine paying higher fees if they would just get rid of that 12est deadline.

[oreo]

Vectorman - I totally agree with you. I would too. In fact, I would not mind paying a little extra to get rid of the FV. That would be nice too.

[Jackbnimble]

Oreo, I was around when you could only change once a month also. It is also a bit hypocritical that the L funds rebalance each & every day(ie. make trades) but the board potentially wants to charge you and I if we trade...I agree with all you say. The board is slow to act but most decisions they make are well thought out.

Vector, I am from W TN how about you?

[Bullitt]

...increased volatility in the markets last week led to increased transfers out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds.

Instead of citing an arguement about fees and deadlines, I see a positive spin on this statement. If so many Government workers have liquidated their holdings and fled to the G fund, the bottom of this correction is imminent. Dumb money is a great contrarian indicator to the market.

A confirmation is the newsflash a co worker of mine gave me regarding Countrywide Financial yesterday. I just sat there in awe and acted as if the news was fresh off the press while thinking, "Let me know when you're getting into the market, that's when I'll be getting out."

[Bullishreturn]

from Govexec.com:
September biggest month (Thanks to Ebb?)
http://govexec.com :
----------------------------------
TSP officials note major growth in plan
By Brittany R. Ballenstedt bballenstedt@govexec.com (bballenstedt@govexec.com) October 15, 2007

Assets in the Thrift Savings Plan grew $6.4 billion in September, the largest increase this year, officials with the retirement savings program said Monday.

At a monthly Federal Retirement Thrift Investment Board meeting, officials overseeing the 401(k)-style plan said last month's growth brought total assets to $231 billion. September's growth was comparable to that of the top 20 private sector 401(k) plans, said Gregory Long, the plan's executive director.

"Over $5 billion [of the growth] was made because of the increase in participants' investments," said Andrew Saul, chairman of the board. "That's huge."

In February, the board predicted that the plan's assets could grow to $300 billion (http://www.govexec.com/dailyfed/0207/020707b1.htm) in three years. Since then, the plan's investments have increased by $25 billion.

TSP Executive Director Gregory Long said for the year to date, the TSP cost participants one basis point, or one cent for every $100 invested. Comparable private sector plans can cost 50 to 80 basis points. Come December, however, the plan's cost will likely increase to two basis points, Long said.

Tracey Ray, chief investment officer for the TSP, said there was an increase in transfers last month, specifically with $2.7 billion transferred out of the fixed income bonds (F) fund. Over a 12-month period, participants transferred the most money out of the international (I) fund, moving $19 billion.

Ray cautioned against transferring among funds, noting that increased volatility in the markets in August caused many participants to move out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds. As a result, many participants missed out on a great deal of growth in September and October, Ray said.

Long said plan officials expect to release a report at next month's meeting that highlights the causes and costs of increased transfers among funds.

Meanwhile, TSP Legislative Director Tom Trabucco said the Congressional Budget Office is developing a cost estimate for two legislative proposals (http://www.govexec.com/dailyfed/0707/071607b1.htm) that plan officials sent to Congress in late August. The proposals would allow automatic employee enrollment and change the default fund for indecisive investors.

"Hopefully the cost estimate will be low, which will be good in terms of getting the legislation through this session of Congress," Trabucco said.

Officials also noted that last week's move to replace participants' Social Security numbers (http://www.govexec.com/dailyfed/1007/101107b1.htm) with new account numbers was successful, adding that they had anticipated the large number of calls from participants saying they did not receive or had lost their new numbers. Pamela Jeanne Moran, TSP's director of participant services, said the plan has reissued 99,000 account numbers to participants.

"There have been some complaints," Long said. "People now have a 13-digit number that they have to remember. But that's the way of the world."