Starting next year, federal and postal workers can invest some or all of the $6.3 billion they have in tax-deferred thrift savings plan (TSP) accounts in the stock and bond market options. Because of restrictions removed Tuesday by President Bush, all but $196 million of their investments are now tied up in Treasury securities.

The change means civil servants who are investing -- and earning $10 million each workday via the savings plan -- could become major company-investment plan players on Wall Street. The change will:

Allow nearly 2 million workers covered by the old Civil Service Retirement System (nearly everyone hired before 1984) to invest in the plan's C-fund (stocks) or F-fund (bonds) options. Previously their contributions -- up to 5 percent of pay -- had to go to the G-fund Treasury option.

Let the 1 million people in the new Federal Employees Retirement System invest (up to 10 percent of pay plus the 5 percent match they get from the government) any way they want. They currently can put only part of their savings -- and none of the government matching money -- in the stock or bond options.

Actual investments begin next year, although workers can start making changes with the next open season, which begins in November.

Officials expect that many people in the old Civil Service Retirement System plan will shift some of their investment dollars to stock or bond market options. Although those options are riskier than the guaranteed Treasury option, they also offer the possibility of fatter payouts. About 60 percent of the workers under the FERS pension plan are already investing in the stock and bond market options.

The G-fund (Treasury) option pays a guaranteed rate that is set monthly. This month it is 8.5 percent. In June it was 8.75 percent.

The C and F funds track the stock and bond markets. They can and do go up and down. Last year the Treasury fund paid 8.81 percent. The C-fund (stocks) has a rate of return of 31.03 percent. The F-fund (bonds) paid 13.89 percent.

Congress easily cleared legislation to remove TSP contribution restrictions. Members of Congress can also invest in the tax-deferred program, which is the government's more generous version of 401(k) plans available to some private-sector workers.

Pay Bill

The House Post Office and Civil Service Committee approved a $9.5 billion plan yesterday designed to bring federal salaries up to industry levels in 10 years. Rep. Gary L. Ackerman's (D-N.Y.) bill would tie raises to the annual percentage change in the Labor Department's employment cost index. It would also give workers local catch-up-with-industry raises each October.

Ackerman's proposal would cost significantly more than a White House plan. It would target U.S. workers in New York, Los Angeles and San Francisco for special raises of up to 8 percent. It also would call for making other adjustments in the white-collar pay process. Ackerman would trigger the employment-cost raises automatically. The White House wants to keep the president's authority to scale down proposed federal raises.