Tsp News From Federal Diary

**swsop** · 01-05-2006, 08:14 PM

TSP Gained in 2005; Expert Suggests Careful Look at C and G Funds

By Stephen Barr
Thursday, January 5, 2006;

The Thrift Savings Plan, where most federal employees go to build a retirement nest egg, finished on the upswing in 2005. Each of TSP's five funds showed gains.

The international stock index fund ended last year with a 13.63 percent rate of return. The index fund of small and medium-size company stocks showed a 10.45 percent gain.
The large common stock index fund posted a 4.96 percent return; the government securities fund was up 4.49 percent; and the bond index fund grew by 2.4 percent.

The stock indexes, though, did not perform as well as they did in 2004. Only the government securities fund, or G Fund, turned in a larger return in 2005. It had grown by 4.3 percent in 2004.

Numerous federal employees review their investments at this time of the year with an eye to improving their diversification and asset allocations.
Paul Yurachek , a financial adviser with Ameriprise Financial Advisers in Maryland, said federal employees should take a "good, hard look" at the G Fund and the common stock index fund (C Fund) that tracks the S&P 500. Investing in the G Fund will protect savings in a period of rising interest rates, while the C Fund should move upward if large company stocks perform well in the opening weeks of the year, Yurachek said.

TSP participants also will want to look over a relatively new addition to the program, the L Funds. They are shaped by professional managers who seek to increase savings while taking no more risk than necessary.
With L Funds, TSP participants select a fund that most closely meshes with the time that they expect to be drawing down their savings for retirement. Employees with many working years ahead of them see their L Fund shift from aggressive to conservative investments as they near the time they will start withdrawing money. Employees near retirement may choose a fund that minimizes stock holdings and market risks.

The TSP is offered to government employees, including military personnel, as a way to save for retirement and is similar to 401(k) plans offered by many companies. As of October, the TSP had more than 3.5 million participants and more than $166 billion in assets.

**Totohydra** · 01-19-2006, 07:30 PM

Built for the Long Haul, TSP's Lifecycle Funds Make a Strong Start

By Stephen Barr
Thursday, January 19, 2006; B02

Lifecycle Funds were introduced into the Thrift Savings Plan last year as a way to encourage participants to diversify their holdings and look to the long haul. But the experience of the past five months shows that the L Funds also can turn in a superior performance.

The L Funds have outperformed all but one of the underlying TSP funds since they became available in August. Only the TSP's international stock fund has had better returns since then.

The TSP offers five L Funds, and they use the plan's menu of four stock index funds, a bond index fund and a government securities fund as their foundation. The L Funds use the index funds and the government securities fund to create investment mixes that are tailored to a time when the participant will start drawing down savings for retirement.

Still, the short-term gains got the L Funds off to a good start.

The 2040 L Fund produced a 3.92 percent rate of return since August and the 2030 L Fund posted a 3.59 percent return, according to data presented to the Federal Retirement Thrift Investment Board this week. A near-term L Fund, the 2010, produced a 2.99 percent gain.

During the same five-month period, the government securities fund (G) had a 1.92 percent rate of return; the fixed-income bond fund (F), 0.95 percent; the large company stock fund (C), 1.88 percent; the small and mid-size company stock fund (S), 2.07 percent; and the international stock fund (I), an impressive 10.77 percent.

The I Fund clearly helped pull up the returns of the L Funds. For example, 25 percent of the assets of the 2040 L Fund are in the I Fund, and the 2010 fund has 15 percent of its assets in the I Fund.

The goal of the L Funds is to produce the best possible return with the least amount of risk for a particular time frame, but the new funds will go up and down because they are built on broad-based indexes that mirror the financial markets.

Over the last five months, more than 214,000 TSP participants have transferred $7.4 billion from the core funds into the L Funds, according to data given to the thrift board.

Participation in the L Funds has been rising steadily and is at 7 percent of the uniformed services, 6 percent of workers covered by the Federal Employees Retirement System and 5 percent of employees in the old Civil Service Retirement System.

Military and other uniformed service personnel and FERS employees have 5 percent of the value of their accounts allocated to L Funds. CSRS employees have 4 percent.

The thrift board this week heard a report from a consultant on the core index funds and voted to keep the current system in place. A review by Ennis Knupp & Associates showed the index funds were providing appropriate coverage of the U.S. stock and bond markets and the international stock market.

Some board members expressed interest in reconsidering the I Fund index in coming months to determine whether TSP participants should have an opportunity to invest in emerging markets in China, India and other countries.

The consultant will conduct a review late this year to explore the possibility of adding new funds to the TSP. Members of Congress have introduced bills to add a real estate investment trust fund and a "corporate responsibility" fund that would take into account the record of companies on human rights and community relations. The consultant's review also might consider energy, environmental and commodities funds for the TSP.

Retirements

Two longtime employees of the Federal Trade Commission have retired.

Stanley Harwood , a consumer response center representative in the Bureau of Consumer Protection, retired Jan. 3 after 32 years of federal service. He began his career as a legal technician in the records division.

Francenia Tucker , an investigative assistant in the consumer response center, retired Jan. 3 after 38 years of federal service. She joined the government as a secretary in the Defense Department and moved to the FTC in 1978.

E-mail:barrs@washpost.com

**swsop** · 01-27-2006, 03:55 AM

The Thrift Savings Plan has decided against changing the
indexes that underlie its investment funds, following a
study by an outside consultant that found that any such
change would be expensive. The TSP also has consultants
studying the potential for adding additional funds that
would reflect narrower segments of the markets. Some
members of Congress advocate, for example, a fund to
track real estate investment trusts. However, the agency
traditionally has been cool to the idea of adding
specialized funds, on the theory that the broader indexes
that the TSP uses already reflect activity in those
sectors. Meanwhile, the TSP has decided to stay with
MetLife as the provider of annuities for those who separate
and wish to draw out their TSP savings as an annuit.

Swsop

**rokid** · 01-27-2006, 08:38 AM

Originally Posted by swsop

However, the agency
traditionally has been cool to the idea of adding
specialized funds, on the theory that the broader indexes
that the TSP uses already reflect activity in those
sectors.
Swsop

I'd like to know what their investment philosophy is:

If they believe in the Capital Asset Pricing Model (CAPM), they would allow us to hold the total market, i.e. all global and domestic equities and bonds in market proportion (25% domestic bonds, 25% foreign bonds, 25 domestic stocks, and 25% foreign stocks). Currently, we don't have access to global bonds or to emerging markets.

If they believe in diversified asset allocation, they'd offer us sectors that non-correlate to the C/S Funds such as REITS and energy funds. The S Fund doesn't offer much in the way of diversification because it is highly correlated with the C Fund.

If they, like Jeremy Siegel, believe in dividends, they'd provide access to REITS.

If they believe in swing trading, then they'd offer more sector funds and perhaps ETFs.

Apparently, they do believe in maintaining the status quo.

**Birchtree** · 01-27-2006, 05:45 PM

They will not make changes until they are prepared to offer defined contribution roll over plans. I hope it is sooner rather than later.

Perhaps as a member of a certain political constituency you are too busy as an employee to find the time to manage your retirement funds. Let Uncle do it for you - if you choose - but I'd like to have the choice, I make time to watch my dollars. Watch the membership of this site grow - and a movement will begin - and voices will be heard. It's also cheaper.

**rokid** · 01-27-2006, 11:37 PM

Birch,

If you're referring to the elimination of CSRS in favor of a defined contribution plan, let's see, 36 years, 14% per year contribution, L2040 type asset allocation. Hmmm, I might also be interested in trading my annuity for that pot of money.

Ain't gona happen! Uncle Sam can't afford it now, couldn't/wouldn't afford it in 1987.

Gotta pay for Iraq, tax cuts, prescription drugs, tax cuts, "bridges to nowhere", New Orleans, Gulf Coast, tax cuts, Iran, Afghanistan, tax cuts.....

That reminds me, with all of these tax cuts, how come my taxes are increasing?

**Birchtree** · 01-28-2006, 12:15 AM

Rokid,

I was referring to the annuity as a cash balance roll over into a defined contribution program. TSP already has most of the infrastructure in place and the logistics would be very efficient - you become in charge of your AGI. Your AGI will determine your tax structure as long as you take the fixed income annuity program. It arrives regularly whether you spend it all or not.

Big brother has your 1099 forms sent by your provider.

Dennis

**rokid** · 01-28-2006, 02:45 AM

Birch,

Obviously, I jumped to the wrong conclusion. Fire, ready, aim. Sorry about that!

**swsop** · 02-23-2006, 01:38 AM

Auditors Will Delve Into Inner Workings of TSP in New Fiscal Year

By Stephen Barr
Wednesday, February 22, 2006

In recent years, the Thrift Savings Plan has installed a new record-keeping system, set up telephone service centers and opened its doors to military personnel who want to save for retirement.

The TSP also has continued to show steady growth, with more than $178 billion in assets at the end of last month. More than 3.5 million government workers contribute to the TSP, a 401(k)-type plan that is among the world's largest.

Like any financial institution, the TSP undergoes regular audits to ensure that proper procedures and internal controls are in place. The audits typically rotate through TSP operations, producing recommendations for improvements.

Yesterday, Labor Department senior auditor William Bailey briefed the Federal Retirement Thrift Investment Board on audit plans for fiscal 2006. The reviews, conducted by Labor officials and a team from KPMG LLP, will cover some of the TSP's most important operations.

Auditors plan to review investment procedures at Barclays Global Investors, based in San Francisco, which handles transactions for the TSP's stock and bond index funds. The auditors also will look at the Treasury Department's handling of the G Fund, the government securities fund, which is once again caught up in Treasury efforts to avoid hitting the national debt limit.

The auditors also will check out the "disaster recovery capability" of the TSP record-keeping system and the operations of the TSP's call center in Clintwood, Va. The TSP moved its mainframe operations to Northern Virginia from the Agriculture Department's National Finance Center in New Orleans about two years ago. A backup system, in the event of a catastrophe in the Washington area, has been set up in Pennsylvania.

TSP officials are confident that transactions involving participant accounts and records can be transferred to the backup system within two to four hours. The computers have undergone preliminary checks, and a major disaster recovery test will be conducted by the TSP shortly. The auditors have been invited to watch.

The auditors also will look at the Army's procedures for handling TSP contributions. Military personnel have been able to invest in the TSP since January 2002, and Congress recently asked the Army to run a pilot project to study whether participation in the TSP helps with recruitment and retention of soldiers.

The board also received a briefing yesterday on the performance of the plan's stock and bond funds. Officials noted that the L Funds, introduced last August as a way for participants to diversify their accounts, have continued to meet performance expectations. With the exception of the L Income Fund, the L Funds since inception have outperformed the G Fund and the C Fund, the large, common-stock index that tracks the S&P 500, officials said.

swsop