The board that oversees the Thrift Savings Plan is reminding federal employees that their G Fund investments are safe — even if the government reaches the debt ceiling and cannot issue new securities to the fund.
“G Fund earnings are fully guaranteed by the Federal Government, and this statutory guarantee has effectively protected G Fund investors many times over the past 25 years,” wrote TSP Executive Director Greg Long on the TSP website.
A 1987 measure, known as the “make-whole” provision, contained in the legislation that created the TSP, ensures that if there was a debt crisis, G Fund earnings would be guaranteed.
“G Fund account balances will continue to accrue earnings and be updated each business day, and loans and withdrawals will be unaffected,” Long wrote.
Last week, President Obama requested a $1.2 trillion borrowing limit increase, the third and final request as part of a deal the White House reached with lawmakers in August to prevent a government default. In a symbolic gesture, the House voted against raising the borrowing cap. The Senate is expected to kill the House’s resolution of disapproval, and Obama’s veto power guarantees the increase will go through as planned. The increase would bring the debt limit to $16.4 trillion.