Federal employees have long enjoyed the benefit of a 3 tiered retirement system including a Defined Benefit (Pension), Defined Contribution (TSP), and Social Security.  Over the past 10+ years, there has been a lot of talk (and some action) in managing expectations for future retirees.  It got serious on November 7th…

The Defined Benefit (Pension) is costing new federal employees significantly more every payday.  Employees on the rolls before 2013 pay 0.8% of their pay toward the pension fund.  Those hired in 2013 pay 3.1% and those hired after 2013 pay 4.4% of their pay to the retirement fund.  Now the new administration is seeking to do away with the Defined Benefit completely!  Representative Jason Chaffetz (R-Utah), Chairman of the House Oversight and Government Reform Committee, is looking to eliminate the defined benefit and moving this action up to the top of his priority list.  The Federal employee Defined Benefit (Pension) has been under attack since the DotCom bubble burst along with most corporate pension plans.  Regardless of the opinion of Federal Employees, the Federal Defined Benefit (Pension) is simply not sustainable, fiscally or politically.

As part of this pension reform, Chaffetz is looking to off-set employee pension loss by increasing the government’s matching portion of TSP.  Depending on the amount of increase in government matching, employees who closely manage their TSP could come out better in the end.  The TSP contribution caps would have to be lifted but, if that were to happen along with significant matching, employees could see their TSP accounts growing quickly IF they are in the stock funds when the market is going up and in the G fund when the market is going down…

TSP management is only getting more important!  Please share this site with your friends and co-workers…