Retirement Fund Director Seeks to Calm Workers' Nerves

In tumultuous times, investors have tumultuous thoughts. Some federal employees invested for retirement in the Thrift Savings Plan's ultra-safe G Fund became unnerved recently. They worried that with the government on the hook for billions of dollars in financial rescue funds, it might raid the G Fund to help pay for it.

TSP Executive Director Gregory T. Long had to go online to calm nerves. He posted a letter on the program's bland but informative Web site, http://www.tsp.gov, to reassure investors that this will not happen.

"The answer is no," Long wrote. "By law, the assets in the TSP are held in trust for each individual participant. So, you don't have to worry about anyone 'tapping' your retirement investments for another purpose."

The episode highlights the high anxiety that afflicts government workers, just like everyone else saving for retirement. The TSP is similar to 401(k) programs offered by the private sector. Like other mutual funds, the three stock-oriented TSP funds slumped last month, posting losses between 9 and 12 percent, with further drops so far this month. The year-to-date figures are worse, with loses ranging from 16 percent to 28 percent for the three funds.

As bad as that is, it's better than the Standard & Poor's 500-stock index, which is down 32.9 percent so far this year.

Administrators have a message for the nearly 4 million people who save for retirement in the TSP: Don't let this financial crisis freak you out. The TSP is distributing a poster that shows a convoy of 18-wheelers snaking through very rocky and hilly territory.

But the road itself is smooth and relatively straight.

"Stay in it for the long haul," the caption advises.

For the most part, investors have not let their anxiety get the best of them, the program's officials reported at a TSP board meeting yesterday.

"Our participants have done well. They have weathered the volatility in the market by not bailing out," said Renée Wilder, director of research and strategic planning.

Many have changed direction, however, and are seeking safer investments. In the first 15 days of October, there were 181,000 transfers of money from one fund to another. That's more than all of the transfers for September, when the crisis began.

The more than 166,000 transfers last month shifted a net $3.5 billion into the G fund. Most of that money came from the large-company stock fund and the international stock fund.