Silver Lining

There's no question that this has not been a good year for investors. All the stories we've written about the Thrift Savings Plan in the past several months have produced a flood of panicky comments from readers. Some concerns are justified; some are merely based on rumors. And while there's not a lot of comfort in looking at TSP returns these days, there are reminders that the situation for federal employees could be much worse.

For starters, unlike the public employee retirement plans that went shopping for mortgage-backed securities earlier this year when those investments looked like a bargain, the TSP doesn't have funds dedicated to real estate or related securities.

That's partly because the TSP is barred by law from having actively-managed funds, where managers buy and sell stocks and securities in an attempt to beat the market's performance rather than to track it, as the TSP funds do. Greg Long, the TSP's executive director, said during a July hearing that the ban on actively-managed funds was designed to prevent lawmakers or special interests from pushing for the creation of narrowly-directed funds that invest in things like real estate or commodities. At that time, some lawmakers said the TSP should consider adding actively managed funds to its offerings. More than four months later, Long's caution looks wise.

TSP investors also have a safe haven where they can move their money when the market goes wild: the government securities fund. As of Oct. 20, 45 percent of TSP investments were in the G fund, which increased 3.95 percent during the last 12 months.

In contrast, the giant California Public Employees' Retirement System actually has seen its investment allocation become riskier. CalPERS' riskiest investments have gone from 9.5 percent of its overall portfolio to 14 percent. The New York Times reported that those numbers could get even worse, because the California system likely has committed to invest more money in private equity and venture capital enterprises, and those commitments will be called in over the next several years, leaving CalPERS more enmeshed in dicey ventures as the value of the rest of its portfolio declines.

That's not to say the TSP hasn't sustained losses. The value of the combined TSP funds is down 15.3 percent over the last 12 months, as international funds and the stocks of small- and medium-sized companies have taken substantial hits.

But the overall value of CalPERS' portfolio fell 20 percent between July 1 and Oct. 20. The system's real estate investments lost 35 percent of their worth in fiscal 2008.

This is not the kind of misery that loves company. Everyone in the investment world is looking around right now, hoping to spot some greener grass somewhere. But the truth is, only a very few investors with unique outlooks are going to come out of this downturn having made any money. In a global downturn, if the options are taking major losses, or sitting tight and accepting small but steady returns, the TSP at least provides a comparatively safe place to do the latter.

Benefits Bonanza

In happier news, certain benefits for members of the armed forces, veterans, and their families were expanded earlier this week. On Monday, the Labor Department published the final rules extending the Family and Medical Leave Act to service members and their relatives. As of Jan. 16, 2009, close relatives of wounded service members, or people who face other hardships because a family member is on active duty, will be eligible for 26 weeks of leave in a twelve-month period.

Also on Monday, the Defense Department announced a new resource directory, published with the Labor and Veterans Affairs departments, for wounded veterans and their families to help them navigate benefits and find housing, doctors, jobs and education opportunities. In Tuesday's Federal Register, VA published a notice increasing the mileage reimbursement rate from 28.5 cents to 41.5 cents to and from VA hospitals and other rehabilitation facilities.