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FED INVESTORS: STEADY-AS-SHE-GOES
October 8, 2001
Federal 401k plan investors reacted to the stock markets dramatic
nose dive---one of the worst ever----with more caution than panic.
About 69,000 inter-fund transfers (almost $1.4 billion net) left
the stock-market indexed C-fund.
Investors moved $28.6 million out of the S (Small Cap) fund and
$4 million from the I-fund (International Stock Index) during September.
Average balances in C-fund accounts dropped about 3 percentage
points relative to investments in the other funds. Balances in the
C-fund (which tracks the S&P 500) dropped about 3 percent. That
is due in part to some investors shifting money into the safer G-fund
(treasury securities) and to the drop in value of the fund itself.
The percentage of total account balances feds had in the C-fund
dropped from 57 percent in August to 54 percent in September.
In dollar terms the C-fund lost about $5 billion from August to
September due to interfund transfers and a decline in value of the
C-fund itself.
But even as some feds last month moved some of their Thrift Savings
Plan accounts---"old money"---to a safer harbor (the G-fund
has never had a losing month) they continued to add new money---in
the form of preset payroll contributions---to the C-fund.
In September investors put $476 million of "new" money
into the C-fund and $247 million in the G-fund.
On September 30th the TSP total value was $93 billion, down from
its high of $103 billion in August 2000. The C-fund was worth $45
billion, the G-fund was worth $39 billion; the F-fund (bonds) was
worth $8 billion. The I fund and the S funds were worth $242 million
and $568 respectively last month.
FED VS. PRIVATE INVESTORS
Federal TSP investors acted pretty much like their private sector
counterparts to the big drop in the markets last month. Hewitt Associates
401k Index, which tracks transfer activity of 1.5 million private
sector investors daily says September 17th was the peak bail-out
day. According to a Bureau of National Affairs report on the Hewitt
numbers the September 17th flight from equities (stock funds) "reached
0.58 percent of total balances, or nine times the "normal level
of activity..." BNA's authoritative Pension and Benefits Reporter
quoted Hewitt Associates' Lori Lucas as saying, "...it is important
to recognize that a movement of one percent of balances is not a
huge shift in sentiment, by any means. The vast majority of 401k
participated stayed put...However, the money that did move was reactionary,
with very heavy movement out of equities into fixed income..."
For more detailed information on how the "other half"
(the private sector) handles its 401k money visit:
Hewitt and PSCA.
HIGH TECH FEDS
The National Treasury Employees Union says this is the perfect time
to grant special rate pay status to government computer specialists,
engineers and scientists. Earlier this year about 30,000 of the
high-tech types in Grades 12 and below got big-time raises. It was
thought that similar special rate status was coming for GS 13 and
above computer types. But the dot.com, IT bubble burst. Agencies
have been granting special pay status to selected, badly needed
experts. But not to the entire class of forgotten IT professionals.
NTEU's Colleen Kelley has asked Congress to drop the other shoe
and give the left-out IT experts raises while public sentiment (because
of the September 11 attacks) is suddenly pro-fed.
SPECIAL RATE DELAY
It will be the end of the month before NTEU and the Justice Department
report back to court with what they hope will be a final back pay
plan for feds who were in special rate jobs between 1982-88. They
were short-changed at pay raise time and the courts---after years
of battling---said show-them-the-money. the problem has been in
finding a formula to parcel out what could be $100 million or more
to the class of special raters estimated at roughly 170,000 people.
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