Thread: News From GovExec on TSP

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

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.

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

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

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.

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?

Originally Posted by James48843

...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."

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 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 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 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 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."