FEDweek

TSP’s G Fund Investments Suspended

Well, they did it again.  The government suspended investments in the G Fund on March 16th.  Each time we hit, or come close to hitting, the debt ceiling, the Treasury Department takes “extraordinary actions” to prevent default and these measures include suspending investments in the G Fund.

The good news is that there is statutory protection for all of us who are invested in the G fund.  Congress recognized that there would be times when politicians would not or could not agree on how to spend money and would, in an exercise in brinksmanship, run into the strictures imposed by the debt ceiling.  They just didn’t recognize how often it would happen.  In fact, in their announcement of the suspension, the Thrift Board said that this statutory protection has been invoked “many times over the last 25 years”.  They probably used the word “many” because they lost count of the actual number.

Basically, the protection requires Treasury to make the G Fund whole after the debt “crisis” is over; and this has been done consistently in the past.  In fact the TSP’s announcement stated:  “G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.”

The only reason we would have to worry about the safety of the monies in the G Fund is if the government actually defaults on its debts.  If that were to happen, the barbarians would already be at the gates, and we would have much more to worry about than our investments in the G fund.