Although it can be a wild ride for investors who track the stock market on a daily--or hourly--basis, things continue to look good for federal workers who have some or all of their $90 billion in retirement savings in their 401(k) plan's stock index fund.

For the 12-month period ending in October, the C-fund returned 25.56 percent. The C-fund tracks the Standard & Poor's 500 stock index. The C-fund lost 2.78 percent in September (when the S&P was down 2.74 percent). But it bounced back last month, returning 6.34 percent, compared with a 6.33 percent gain for the S&P 500 index.

During the same 12-month period, the F-fund, which is indexed to the bond market, returned 0.47 percent. The G-fund (invested in special Treasury securities) returned 5.78 percent for the same 12-month period.

At the end of October, according to the Federal Retirement Thrift Investment Board, the C-fund was worth almost $54 billion. The G-fund was just over $31 billion, and the F-fund was slightly above $4.1 billion in value.

The C-fund has returned between 22 percent and 37 percent over the last four years.

During 1998, the C-fund returned 28.44 percent, the F-fund 8.70 percent and the G-fund 5.74 percent. In 1997, the C-fund returned 33.17 percent, the F-fund returned 9.60 percent and the G-fund returned 6.77 percent.

Many federal and postal workers are investing in the thrift savings plan and most of the money in the 401(k) program--because of regular payroll contributions and its growth--is in the C-fund.

Because it is a stock index fund, the C-fund is subject to the ups and downs of the market. In recent years--despite some very bad months--it has had more ups than downs. Long-term C-fund investors have four to five times more money in their accounts than people who invested the same amount in the two other funds.

For people who watch the short-term fluctuations of the market, the C-fund can be unnerving. It lost money in February, May, July, August and September of this year. But over the long haul--thanks in part to a strong performance in October--it remains the fund to beat.

Navy, Air Force Retirees

There will be a special seminar Nov. 20 at Friendly High School in Fort Washington for retired Navy and Air Force personnel and their families. The session will update retirees on Social Security, a demonstration Medicare program and changes in the Defense Department pharmacy program. There will be booths for wellness screening, eye, hearing and blood tests, and flu shots will be provided. To sign up for the session, which runs from 9 a.m. to 3 p.m., call 301-295-4120.

Financial Planning

The Office of Personnel Management plans a live satellite broadcast tomorrow on financial and retirement planning. Feds worldwide can see the program and get details from OPM's Web site, www.opm.gov/lag/hrforum.

The satellite program will be shown live as part of a Savings and Education Fair for feds in the Patio Room of the Agriculture Department's Jamie L. Witten building, 14th Street and Independence Avenue NW. The fair runs from noon to 3 p.m. and will feature displays and advice from experts in the finance and education fields.

Pay, Pension Increases

Active-duty federal workers and military personnel will be getting a 4.8 percent pay raise in January. It will be a flat 4.8 percent for all military personnel, but the amount could vary by region for federal workers.

President Clinton shortly will announce how much of that increase will be devoted to locality pay adjustments for civil servants. If, for example, the raise is split 3.8 percent for national adjustments and 1 percent for locality raises, feds in the Washington-Baltimore area would get a total increase of 4.94 percent. Civil servants in San Francisco would get the largest adjustment--5.59 percent--while government employees in Richmond would receive 4.76 percent and those in Norfolk would get 4.69 percent.

Federal and military retirees--and people getting Social Security--will get a 2.4 percent cost-of-living adjustment in January. The COLA is based on the rise in living costs from the third quarter of this year from the third quarter (July, August, September) of 1998.

Federal pay raises are based on changes in private-sector wages and political determinations made by the White House. Federal annuities are linked to inflation. That's why the two amounts vary, and that's why--in times of high inflation--retirees get bigger percentage adjustments than workers.

Mike Causey's e-mail address is causeym@washpost.com.

Tuesday, Nov. 9, 1999