Treasury refills federal pension coffers

The Treasury Department has made whole the federal pension coffers it tapped during the debt ceiling debacle, according to an official at the Federal Retirement Thrift Investment Board.

Tom Trabucco, director of external affairs for the board, said Tuesday that Treasury has contacted the board and within the next month will send a report to Congress on the matter. The board will post that report on its website, he said.

In May, Treasury suspended investments into federal employees' pensions, as the government officially hit its debt ceiling of $14.3 trillion. At that time, Treasury Secretary Timothy Geithner announced a debt issuance suspension period from May 16 to Aug. 2, when the government was set to default on its obligations. 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. The G Fund is invested in interest-bearing Treasury securities -- bonds -- that comprise the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees' Retirement System, and those investments are made up of securities also considered part of the public debt.

Federal law (Sections 8348 and 8438 of U.S. Code Title 5) requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund 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.

All but two of the investment options in the federal employee retirement savings plan -- the F Fund and the G Fund -- posted losses in July after two months of similar declines. The F Fund invests in fixed-income bonds.

During Tuesday's meeting, TSP Executive Director Greg Long told the board that in the past month inquiries and transactions among plan participants were "substantially above normal," due to the market's volatility and uncertainty over the debt. Early last week, participants logged about 25,000 interfund transfers -- mostly going into the stable G Fund -- per day on Monday and Tuesday, Long said, which is about four to five times more than transfers completed during the same time last year, he added. That figure slowed down to about 4,000 per day by the end of the week, Trabucco said.

The TSP also received many more inquiries from participants over the phone this past month, said Long -- about 12,000 per day compared to 3,000 per day during the same time period last year. Long praised the TSP's capacity to handle the call volume and the uptick in interfund transfers. "The investments we made in the infrastructure have paid off here," he said, adding that the service wasn't perfect, but was vastly improved from October 2008, when chaos in the financial markets taxed the TSP's phone and computer lines.