Lower TSP expense
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clifp
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Tell me again why the President and other Republican's proposal to allow younger workers to invest a portion of their SS into a TSP open to all Americans was a bad idea? An ER of .015% wow
donheff
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And everyone always says government programs stink. This is Federally overseen, privately administered (but under a contract, not as a for profit enterprise). Universal health care could go this route.
Khan
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Federal workers pay into SSA and into TSP (if they choose).
clifp
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I agree that is one of the reasons that I am not horribly opposed to some type of government program for health care . Medicare is also reasonably efficient
Why not let all of us with piss poor choices with high fees in our 401k's contribute to TSP?
At 34, I have been paying into the system for 20 years, 18 full time. I would gladly give up all future SS payout benefits if I could redirect the 12.4% (6.2% plus employer match) into the TSP. Even if I was restricted to an age appropriate fund like the L2040.
I am already being told I can look forward to only 75 cents on the dollar. Why would I want to continue to contribute to a losing investment.
I am already being told I can look forward to only 75 cents on the dollar. Why would I want to continue to contribute to a losing investment.
mickeyd
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Makes one wonder why the average equity MF has an ER of over 1%, does it not?
clifp
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I thought that TSP was administrated by a private company and they make money. Fidelity I think?
I am sure somebody fortunate it enough to actual have a TSP account will come along and correct.
I am sure somebody fortunate it enough to actual have a TSP account will come along and correct.
clifp,
See Who administers the TSP.
I think one of the reasons that the TSP is so freakin' cheap is because there's sooo much money in the funds. The fund with the lowest $$ is the F fund with $13.3 BILLION in assets.
Yes and not including the L funds there are only 5 funds choices. Many people complain about that, but John Bogle stated it was one of the best investment programs out there. Boring and simple are what wins.
And the L Funds are simply preapportioned target date combinations of the 5 basic funds.
The back-office nuts & bolts administrator is Sungard Data Systems. They took over (in 2001? 2002?) from a contractor who'd fallen flat on their faces and made a mess of the data. Sungard was taken private a couple years ago by the likes of KKR & Blackstone, but I don't know who's doing what these days.
SunGard - Wikipedia, the free encyclopedia
Whoever's doing it, I can't see how they'd be happier with 1.5 bp than with 3 bp. But spouse is twice as happy with her TSP account...
I'm sure they're plenty of people/contractors that would be lining up if the current peeps don't want to re-apply when the contract is up.
Texarkandy
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TSP is part of federal employee's compensation package - not a welfare program.
Just like FEHBP (Federal Employee's Health Benefits Plan). FEHBP would be destroyed by some of the proposals I've heard (from Dems) of allowing the general public to participate.
I'm sure some folks who work for large corporations that have good compensation/benefit packages would oppose allowing the general public to participate.
Yeah, I bet that TSP is a heckuva recruiting incentive to get people to forsake private enterprise for public service.
I think Clif's question is well put. If the federal govt is capable of finding contractors to administer a tax-deferred fund with rock-bottom expenses and index choices, how hard would it be to make a similar program available for a portion of Social Security payroll taxes... or indeed, for any employee's tax-deferred contributions?
I think we've all seen how capitalism has served the "civilian" 401(k) system. Just about every day we see a post on this board asking whether an employee should hold their nose and invest in their 401(k) for the tax deferral, or just go with a taxable Vanguard index fund.
Only one reason: Because some people are willing to pay that much.
Texarkandy
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401K's have more to do with oppressive taxation than they do with capitalism.
Texarkandy
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For those not familiar with federal compensation/retirement - the good ole federal pension system (CSRS) was sliced & diced into three pieces in the early 1980's by Reagan into something called FERS. The pension portion of the plan was significantly gutted.
Nowadays a fed retiree's retirement income comes from a 1/3 pension, 1/3 TSP Plan, & 1/3 Social Security. The SS portion of course you can't get till age 62 & there are penalties in the pension for retiring before something called your MRA (Minimum Retirement Age).
I think I speak for most feds when I say they would gladly be covered under the good ole CSRS plan where the retiree gets a full pension. (which by the way has a better COLA formula than FERS)
If it weren't for the special provisions in FERS for Law Enforcement / Firefighters & I had to look forward to retirement under "regular" FERS I would have left for a different career in the private sector long ago personally. (no offense to those of you out there under regular FERS - that's just me)
I have a BIL who retired a couple years ago from a medium size city police department whose retirement bennies are quite a bit better than my FERS.
donheff
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Well, yes and no. Anyone who stays long enough to retire would be better off under the old program. But most Feds don't stay for an entire career. FERS was designed to balance a decent retirement program with portability. You can take most of it with you when you leave government. The early retirement and COLA provisions are not as generous as the old system but the combination of the FERS 1/3 (partial COLA) and Social Security (full COLA) make for a decent foundation. The feds needed to do something - not paying into social security was causing a lot of backlash as the SS debates ramped up in the 70s early 80s.
As to the ruination of the TSP or the Federal health benefits program by opening them to the general public, I think that is speculation, not fact. My nephew (caught with cancer two months after college graduation and termination of health coverage) ran for Congress in 1992 with his health system woes fresh in mind. He had a fairly well thought out proposal to open the Fed health program and the research indicated the risk pool could be kept wide and the system could be protected.
Who is it that doesn't stay long enough? If you leave early there are significant penalties (5% per year before the MRA) that apply to the pension portion of the benefits. Unless you are talking about congressman and senators and I believe they just might vest differently than other members.
I was only a minor child in the 80's so I wasn't around for those debates, but I don't understand what was to debate. Those that didn't pay into SS also didn't collect SS either. They still paid that money from their paychecks just like SS people do, it just went towards their pensions instead (which is really what SS is like).
I would love to have the opportunity to opt out of the SS program and forfiet any future benefits (and I have worked since I was 14, full time and living on my own since 16) altogether and be allowed to put the entire 12.4% into an alternative vehicle for my own personal savings (like the TSP).
I would be willing to wager there are alot of people (obviously not represented on this board) that don't even save 12.4% of their pay as it is.
Khan
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To all and sundry: the TSP is not an alternative to SSA. It is a 401k thingy.
True and if your implication is that the TSP is not a risk free retirement system in comparison to OASDI, I understand that. However the SS system is also not without risk.
I do believe that something will eventually be done about the system.
What that will be I don't know, but until then my statements tell me that I will only get 75 cents on the dollar under the current system. A forecast of a 25% "loss" that I have no way to alter is worse I think.
The debate and backlash donheff referred to was related to the dissatisfaction that you are expressing about SS. People resented the fact that the law required them to pay into SS, while federal employees were not required to do so. As SS began to be seen as a relatively poor "deal" for most Americans, the dissatisfaction with allowing government employees out of the SS system also grew. The public wanted everyone to be shackled to the same system. I think that makes sense.
Now, if we could make Congress live with the typical 401K offerings most private sector employees get, maybe we'd see some reform there, too.
