The Treasury Department likely will soon “disinvest” the G fund as a response to the end of a temporary suspension of the federal debt ceiling, which the government already is above.
During disinvestment periods, the Treasury stops issuing the special daily securities that make up the fund, taking the obligation to repay those securities off the Treasury’s books and freeing up enough cash to keep the government operating for months. While that has been done many times and investors are guaranteed they won’t lose money, many TSP participants deeply resent such use of the G fund, which is their own money, not a government trust fund.
The Treasury already has used a maneuver involving the civil service retirement fund that also frees up money temporarily, with no direct impact on employees or retirees. It’s estimated that those maneuvers, plus another involving special securities issued to state and local governments, will push off the need to raise the debt ceiling until around September.