TSP as a model for other 401(k)s ?

[Purron]

Interesting little article about the TSP. There's an interview you can listen to as well.

Federal News Radio 1500 AM: The TSP as a model for other 401(k)s?

 

[Bimmerbill]

I like the TSP a lot. The main gripes I hear are limited fund selection and restricted fund transfers. But, that is what keeps the costs down!

Can't wait until they implement the ROTH option soon.

 

[W2R]

I like the TSP a lot, too. Mine is all in "G Fund" in retirement. I am taking equal monthly payments from it which cover my retirement expenses just about completely.

There are many, many, many thousands of federal jobs open at www.usajobs.opm.gov . Anyone who wants to participate in the TSP is more than welcome to apply there and get one! You'll be vested quickly. So far, nobody who is qualified has wanted federal benefits such as the TSP badly enough to apply for my former job, and take the bad with the good.

 

[friar1610]

I like the TSP a lot. The main gripes I hear are limited fund selection and restricted fund transfers. But, that is what keeps the costs down!

Can't wait until they implement the ROTH option soon.

A lot of "Bogleheads" would think that's great: not too many choices to distract you and incentives to "stay the course" rather than trade a lot.

When I was in the Navy the TSP wasn't available to military folks. But I convinced a few civilians at one agency to which I was assigned to start investing in the TSP. One of them in particular has thanked me many times.

 

[Texas Proud]

I would say that for a lot of plans it would be better... but the plan we have here is better IMO (note.... I am the one who negotiated the whole thing, so I might be biased )

But, we have about 70 funds... so whatever investment style you like, there is a group of funds for you..

We have a basic group like the TSP... very low cost indexes..

We have a group of target funds... pick and forget...

We have a group of active managed funds for the conservative bend..

We have a group of specific kinds... real estate, regional, commodity, international...


Now, I was warned that this might create some problems for some, but most people have said they like the variety... and in the future we are hoping to get a self directed broker account (we did have that in our last one, but could not get it in our new one yet)....

 

[FUEGO]

I'm not usually one to suggest "the government can do it better" or "give us more regulation to save us from ourselves", but I'd like to see legislation requiring something along the lines of a TSP line up of choices as the bare minimum that a 401k plan could offer. With reasonable fees. Financial reform I could support. Or change I could believe in or something like that.

I doubt it would be a problem to implement, and I would guess it would dramatically increase the competition among 401k providers, since they would be competing on costs and fees to provide X product (at a minimum).

Like this would ever happen given the lobbyists out there!

What I would do for an I fund in my otherwise great 401k...

 

[ziggy29]

I'm not usually one to suggest "the government can do it better" or "give us more regulation to save us from ourselves", but I'd like to see legislation requiring something along the lines of a TSP line up of choices as the bare minimum that a 401k plan could offer. With reasonable fees. Financial reform I could support. Or change I could believe in or something like that.

Except that it would be hard for them to guarantee that the rest of us had the equivalent of the G fund....

 

[mickeyd]

Wouldn't it be interesting if all 401(k) and 403b plan participants had the option to either opt into "their plan" or the TSP? All it would take would be a simple piece of legislation to make it happen.

 

[W2R]

Wouldn't it be interesting if all 401(k) and 403b plan participants had the option to either opt into "their plan" or the TSP? All it would take would be a simple piece of legislation to make it happen.

Hey, as long as we are opting into parts of a compensation package, can I opt into their lifetime salaries or my lifetime salary, too? Oh good, thanks.

 

[Bimmerbill]

A lot of "Bogleheads" would think that's great

Hey, I think its great too.

I check the TSP website frequently for jobs. I don't think their staff is very big. Interesting to read the boards minutes too.

Prolly would not move to the DC area tho...

 

[FUEGO]

Hey, as long as we are opting into parts of a compensation package, can I opt into their lifetime salaries or my lifetime salary, too? Oh good, thanks.

Pre-2008 that may have made you pretty wealthy. Lately private salaries have been pretty ugly. We did finally get our old 2008 salaries back, but we are still waiting to get the 401k matches back. Maybe us in the private sector could have the option to take a government salary when things get rough. That's change I could believe in!

Sorry, just a little bitter at government employees lately. Whining over 1/2% pay cuts last year that were actually furloughs whereby they received and extra 10 hours vacation in lieu of the 1/2% salary. And there were still COLA adjustments and merit based increases. When many people I know in private consulting and law firms had salaries cut much more, with no reduction in hours.

But back on topic, I would think that getting a TSP-like option as an opt in for private firms would be a worthwhile retirement/investment reform. Maybe skip the G fund, since creating that and making the principal remain intact would cost the government something. Or reduce it to very short term treasury yields (essentially money market).

 

[clifp]

One of the things I learned from reading the board is that TSP is the best retirement plan. I did a bit of research and decided it is really terrific fund for all of the reason that NPR story talks about.

Honestly, if the government really wanted to people retire they'd open the TSP to every employer especially the small ones. I wouldn't even mind if they charge private employer a slightly higher fee.

 

[Westernskies]

Hey, as long as we are opting into parts of a compensation package, can I opt into their lifetime salaries or my lifetime salary, too? Oh good, thanks.

Conversely, as long as we are opting into parts of a compensation package, can I opt into the employment security, COLA'd raises, and lifetime medical benefits of a public service career, instead of the competitive pay-for-play system I have been toiling under in the private sector? Oh, good, thanks.

 

[FUEGO]

Conversely, as long as we are opting into parts of a compensation package, can I opt into the employment security, COLA'd raises, and lifetime medical benefits of a public service career, instead of the competitive pay-for-play system I have been toiling under in the private sector? Oh, good, thanks.

Only if they can put a big framed picture of Obama up in the front entrance of your building!

 

[Purron]

Only if they can put a big framed picture of Obama up in the front entrance of your building!

Us former feds know they do put a pic of the prez in the lobby of guvmint buildings.

 

[FUEGO]

Us former feds know they do put a pic of the prez in the lobby of guvmint buildings.

As a non-fed, it is always a shock when I walk into a nondescript research lab or suburban office building and see this smiling photo of the sitting president smiling back at me. Private companies don't generally do this. It is like big brother is watching you...

 

[Westernskies]

Only if they can put a big framed picture of Obama up in the front entrance of your building!

No problemo, amigo- as long as I get to choose the frame.

 

[Emeritus]

Conversely, as long as we are opting into parts of a compensation package, can I opt into the employment security, COLA'd raises, and lifetime medical benefits of a public service career, instead of the competitive pay-for-play system I have been toiling under in the private sector? Oh, good, thanks.

There is no question that for people of limited skills at the bottom of the pyramid federal employment is a very good deal. But the pay is quite low for many professional positions. here is a typical current job ad for an expereinced engineer in a life critical job:

Civil Engineer at the Department of Energy

• Duty Locations: New York City, NY and Chicago, IL
• Major Duties: Inspect engineering evaluation and analysis of non-federal hydroelectric projects to insure the safety of the projects and compliance with the terms of the license, the provisions of the Federal Power Act and the Commission regulations. Review and perform evaluations and analyses; and prepare engineering reports to establish and document the dam safety, public safety, and environmental and license compliance of the Commission hydroelectric projects.

So this is a person who is doing life safety reviews on major Hydro power systems
The posted salary range for New York is
Salary Range: $68,625.00 - $89,217.00

If you think you can get a top engineer for that price who is willing to take crap from every ignorant member of the public who thinks feds are overpaid you do not understand the market for engineers.

 

[FUEGO]

There is no question that for people of limited skills at the bottom of the pyramid federal employment is a very good deal. But the pay is quite low for many professional positions. here is a typical current job ad for an expereinced engineer in a life critical job:

Civil Engineer at the Department of Energy

• Duty Locations: New York City, NY and Chicago, IL
• Major Duties: Inspect engineering evaluation and analysis of non-federal hydroelectric projects to insure the safety of the projects and compliance with the terms of the license, the provisions of the Federal Power Act and the Commission regulations. Review and perform evaluations and analyses; and prepare engineering reports to establish and document the dam safety, public safety, and environmental and license compliance of the Commission hydroelectric projects.

So this is a person who is doing life safety reviews on major Hydro power systems
The posted salary range for New York is
Salary Range: $68,625.00 - $89,217.00

If you think you can get a top engineer for that price who is willing to take crap from every ignorant member of the public who thinks feds are overpaid you do not understand the market for engineers.

No offense to feds or others who do this kind of work, but this is a "paperpusher" position as best as I can tell. Yes, it would require some limited engineering knowledge most likely. But read the description closely. "Inspect engineering evaluation and analysis... Review and perform evaluations and analyses; and prepare engineering reports". In other words, receive consultants' or underlings reports, read them (maybe), and regurgitate what the consultant told you into a report that gets stuck in a file somewhere, maybe after being advertised publicly for a certain period of time. Paperpushing at its finest, for a modest $68-89k plus generous benefits.

Worst case, a dam fails, kills a couple thousand people and you get transferred to a different division. Then the subsequent investigation by your agency squarely places blame on anyone but your agency. Maybe point some fingers at private consultants. Maybe blame "procedural hurdles and difficulty in interagency communications and coordination". Form a task force and a blue ribbon committee to study the issue. Maybe hire a management consultant to put together a nice bound report on how to avoid the problem in the future. Then stick that dust collector on the bookshelf and get back to business as usual. Call me a cynic...

 

[FUEGO]

I know locally the GS wages for technical people are pretty darn spiffy. If they had an opening in my areas of expertise I would be on it. And from having major fed agencies as clients of mine, and given the type of work I do, lets just say that I know the folks there aren't exactly burning the midnight oil. Watch your feet at 4:45 pm if you know what I mean. Not that there is anything wrong with that...

 

[Westernskies]

There is no question that for people of limited skills at the bottom of the pyramid federal employment is a very good deal. But the pay is quite low for many professional positions. here is a typical current job ad for an expereinced engineer in a life critical job:




Civil Engineer at the Department of Energy

• Duty Locations: New York City, NY and Chicago, IL
• Major Duties: Inspect engineering evaluation and analysis of non-federal hydroelectric projects to insure the safety of the projects and compliance with the terms of the license, the provisions of the Federal Power Act and the Commission regulations. Review and perform evaluations and analyses; and prepare engineering reports to establish and document the dam safety, public safety, and environmental and license compliance of the Commission hydroelectric projects.

So this is a person who is doing life safety reviews on major Hydro power systems
The posted salary range for New York is
Salary Range: $68,625.00 - $89,217.00

If you think you can get a top engineer for that price who is willing to take crap from every ignorant member of the public who thinks feds are overpaid you do not understand the market for engineers.

No mention in my post of whether engineers in the Federal system are overpaid. Not sure where you got that idea.

Point is that many federal employess are WILLING to work for GS wages in part because of post- retirement benefits that are unstainable and unavailable to most private sector employees. If you feel that Engineers in the public sector are underpaid, then take your skills and experience and go to work in the private sector, with the risk, responsibilities, and rewards that go along with it. But don't expect to be able to cherry- pick a GSA retirement package, too.

I know a little bit about the market for Engineers- I have actually hired quite a few of them - electrical, mechanical, civil. and software engineers, and supervised them as well in my career...we tend to stay away from GS types for many of the reasons outlined by Fuego. The public/private work culture is just too different, in our experience.

 

[ziggy29]

Point is that many federal employess are WILLING to work for GS wages in part because of post- retirement benefits that are unstainable and unavailable to most private sector employees.

Unavailable to the private sector? Mostly true and becoming more and more true as time goes by. And many in the private sector who were hired into those retirement deals have since lost them.

Unsustainable? CSRS was, but I don't think FERS is. It's the "3% at 50" type state and local pension plans, with COLAs and retiree health insurance for life, which are the unsustainable ones.

 

[Emeritus]

No mention in my post of whether engineers in the Federal system are overpaid. Not sure where you got that idea.

Point is that many federal employess are WILLING to work for GS wages in part because of post- retirement benefits that are unstainable and unavailable to most private sector employees. If you feel that Engineers in the public sector are underpaid, then take your skills and experience and go to work in the private sector, with the risk, responsibilities, and rewards that go along with it. But don't expect to be able to cherry- pick a GSA retirement package, too.

I know a little bit about the market for Engineers- I have actually hired quite a few of them - electrical, mechanical, civil. and software engineers, and supervised them as well in my career...we tend to stay away from GS types for many of the reasons outlined by Fuego. The public/private work culture is just too different, in our experience.

You can't have it both ways If you need the skills you pay people now or later. You can pay with cash, later benefits, or current working conditions including health benefits respect or job security . Crap on them by calling them "paper pushers" when you have no idea of the job and you either have to pay more or get worse people.

 

[ziggy29]

You can't have it both ways If you need the skills you pay people now or later. You can pay with cash, later benefits, or current working conditions including health benefits respect or job security.

I think it's largely dependent on the field one is in. Government already pays very well relative to the private sector in administrative and clerical fields, and not quite so well in terms of science, engineering and medicine. I suspect it's because government employers base compensation more on educational attainments than "market" based pay for specific skill sets.

And where it already pays comparable to (or better than) the private sector, the job security and benefits widen the gap even more. (It's hard to put a specific "dollar amount" on job security, but it's surely worth something, and all else being equal a "secure" job should probably pay somewhat less than one where folks are vulnerable to layoffs.)

Having said that, I'd much prefer cost certainty over writing IOUs in the form of future promises of unknown cost. If that means raises and better 401K/403B matches to come closer to the private sector, so be it.

 

[FUEGO]

You can't have it both ways If you need the skills you pay people now or later. You can pay with cash, later benefits, or current working conditions including health benefits respect or job security . Crap on them by calling them "paper pushers" when you have no idea of the job and you either have to pay more or get worse people.

Hey, let's be fair, I'm the one calling this position a paperpusher position. Obviously there are government jobs that are nonpaperpusher. This job description reads like a paperpusher job description.

I searched for the actual job posting at USAjobs and only found the Chicago position but it pays $75-116k. Given the economy, you would be surprised at who you might get at this pay level. That pay level is a lot more than many engineers in private consulting. From talking to hiring managers at my governmental counterpart agencies, when they post a job, they are getting dozens of people perfect for the job, versus a few qualified candidates just few years ago.