Pension Tension Mounts

A Democratic senator who represents many government workers fired off a letter on Monday to Treasury Secretary Timothy Geithner, imploring him to protect federal employee pensions during the budget process and debt ceiling negotiations.

"Promises made must be promises kept," wrote Sen. Barbara Mikulski, D-Md., in the June 13 letter. "We must not put federal employee pensions on the chopping block in budget reduction negotiations."

Last month, the Treasury Department suspended investments into federal employees' pensions, when the government officially hit its debt ceiling of $14.3 trillion. The government expects to default on its obligations on Aug. 2, unless negotiators can come to an agreement. The White House and lawmakers have several meetings planned this week to try and hammer out a deal. If a deal isn't cut before the deadline, there could be government furloughs.

The law allows the government to take extraordinary measures to avoid a default, including tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the government securities (G) fund, the most stable offering in the Thrift Savings Plan's portfolio. Federal law also requires the Treasury secretary to refill the coffers of the G Fund and the CSRF once the issue of the debt ceiling is resolved and to make up, in addition, for any interest lost on those investments during the suspension. This has happened five times since 1996, most recently in 2006.

Mikulski also criticized an idea gaining traction that would ask federal employees to contribute more to their retirement plans in an effort to cut spending.

"Unfortunately, rather than being recognized for their contributions, federal employees have become scapegoats for the financial problems our nation faces," Mikulski wrote.