Federal Employee Pension Funds Hold $837 Billion in Treasury Securities, and the Thrift Savings Plan Holds Another $194 Billion

Fun Fact: Federal employees own $1 trillion of U.S. debt

April 6, 2015

Federal Times - If federal employees were a foreign country they would rank only behind China and Japan as holders of U.S. Treasury securities, according to federal data.

The Civil Service Retirement System and the Federal Employee Retirement System hold a combined $837 billion in Treasury securities, and the Thrift Savings Plan holds another $194 billion. In combination they rank only behind the Social Security Trust Fund, China and Japan as holders of public debt.

U.S. Public Debt
(All figures in billions $)
Debt holder	Debt owned
Social Security	2,738
China	1,239
Japan	1,238
Federal employees	1,039
Military retirement fund	536
Belgium	354
Carribean Banking Centers	338
Oil Exporters	291
Brazil	256
Russia	82
Source: Treasury Department

While federal employees do not directly control the pension system portion of the public debt, federal employee retirement funds constitute about 6 percent of the $18 trillion in debt the Treasury Department is currently financing.

This fact is made sharper by the recent debt limit standoffs in Congress, as one of America's major creditors are its own federal workers.

On March 16 the Treasury Department notified Congress that it was once again at its statutory limits and would have to begin various measures to juggle debt payments until Congress raises the debt limit.

On March 17, Treasury Secretary Jacob Lew sent a letter to Congress notifying them that one of the "extraordinary measures" the agency can take to stay under the debt limit is to suspend the investment of the G fund – the securities investment fund of the TSP – and the federal pension funds as well.

"By law, the G Fund will be made whole once the debt limit is increased. Federal retirees and employees will be unaffected by this action," Lew wrote. 

In October 2008, when plummeting stocks were decimating federal employees' retirement savings, federal employees responding in large numbers by pulling their remaining money out of the Thrift Savings Plan's stock-based funds and putting them into the safer G Fund pegged to U.S. Treasury securities.

According to the Federal Times on October 11, 2008:

The G Fund is the most secure of the five individual TSP funds — payment of principal and interest is guaranteed — although it typically yields TSP's lowest return.

But not lately. Throughout this year — and especially in recent weeks — the G Fund has emerged to millions of TSP participants as a safe harbor from the worsening financial turmoil.

In September alone, TSP retirement accounts lost almost $10 billion — from $228 billion to $218 billion, the lowest level since March 2007. Also last month, TSP participants transferred $3.5 billion of their savings from other funds into the G Fund — the largest shift of TSP money since January, when participants moved $4.4 billion into the G Fund. January was when global stock markets first started dropping sharply because of concerns over the subprime mortgage crisis.

Federal Employee 'Thrift Savings Plan'

The Federal Retirement Thrift Investment Board (FRTIB), founded in 1986, is an Independent Federal Agency responsible for administering the Thrift Savings Plan (TSP). The FRTIB helps Federal employees and members of the Uniformed Services retire with dignity by providing benefits similar to private sector 401(k) plans [in addition to their traditional defined benefit pension plans]. The TSP is widely considered to be one of the best retirement plans in the world and a model for defined contribution plans. The FRTIB's mission is to administer the TSP solely in the interest of its participants and beneficiaries. The TSP is one of the world's largest defined contribution plans, managing over $430 billion for more than 4.7 million participants located in every time zone around the world. The FRTIB is located in Washington, DC and employs approximately 200 Federal employees. In 2011, 2012, and 2013, the Agency was voted one of the "Best Places to Work in the Federal Government" by the Partnership for Public Service. [Source]

From www.TSP.gov

Fund Management

The FRTIB Executive Director currently allocates the selection, purchase, investment, and management of the assets contained in the F, C, S, and I Funds to BlackRock Institutional Trust Company, N.A.

G Fund

The G Fund assets are managed internally by the Federal Retirement Thrift Investment Board. The G Fund buys a nonmarketable U.S. Treasury security that is guaranteed by the U.S. Government. This means that the G Fund will not lose money.

F,C,S, and I Funds

The Federal Retirement Thrift Investment Board currently contracts BlackRock Institutional Trust Company, N.A. (BlackRock) to manage the F, C, S, and I Fund assets. The F, C, S, and I Fund assets are held in separate accounts.

The F, C, S, and I Funds are index funds, each of which is invested in order to replicate the risk and return characteristics of its appropriate benchmark index. For example, the C Fund is invested in a stock index fund that fully replicates the Standard and Poor's 500 (S&P 500) Index, a broad market index made up of the stocks of 500 large to medium-sized U.S. companies. The C Fund's objective is to match the performance of the S&P 500. The F, C, S, and I Funds remain invested regardless of the performance of the securities markets or the overall economy.

L Funds

The L Funds are invested in the five individual TSP funds based on professionally determined asset allocations.

Expense Ratio

The TSP expenses are the costs of administering the TSP. The gross expenses include:

• The costs of operating and maintaining the TSP's recordkeeping system,
• The cost of providing participant services, and
• The printing and mailing of notices, statements, and publications.

Expenses are offset by the forfeitures of Agency Automatic (1%) Contributions of FERS employees who leave Federal service before they are vested, other forfeitures, and loan fees. Because these amounts are not sufficient to cover all of the TSP's expenses, TSP participants share in the remainder of the costs.

For 2014, the average net expense was $0.29* per $1,000 invested.

The net TSP expense ratio represents the amount that participants' investment returns were reduced by TSP administrative expenses.

Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2014 TSP net expense ratio* of .029% is 2.9 basis points. Expressed either way, this means that expenses charged to each TSP account in 2014 were approximately 29 cents per $1,000 of investment.

* Fees associated with securities lending are not included in 2014 administrative expenses. Consistent with standard practice in the industry, they are charged in addition to administrative expenses. Other expenses are disclosed in the financial statements and are available in the April 2015

Top 10 Largest U.S. Pension Funds

December 12, 2012

Llenrock Blog - Based on the most recent data I could find, from Pensions & Investments and this PDF, here are the Top 10 Largest Pension Funds in the U.S.:

10. New York State Teachers (total assets in billions: $80.3)
9. IBM (83)
8. Texas Teachers (100.2)
7. General Motors (101.5)
6. New York City Retirement (115.2)
5. Florida State Board (123.4)
4. New York State Common (133)
3. California State Teachers (138.9)
2. California Public Employees (214.4)
1. Federal Retirement Thrift (264)