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Strategies & Market Trends : Waiting for the big Kahuna
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To: Ilaine who wrote (30292)10/5/1998 10:13:00 AM
From: Terry Whitman  Read Replies (1) of 94695
 
CB,
You're a little off on FERS. Allow me to help set the record straight:
Federal Employees are currently under two different retirement systems. Older employees (Pre 1986) are under the Civil Service Retirement system (CSRS). Younger employees are under FERS.

CSRS employees get a basic pension when they retire. They are also allowed to invest up to 10% of their pay in the tax deferred TSP (Thrift Savings Plan). There is no match on their contributions. They do not pay social security taxes, and they do not receive benefits.

FERS employees have 1% of their pay funded by the gov't in the TSP. They can also put up to 10% of their pay in the TSP. The gov't encourages this by matching the first 5%. They receive a much smaller pension, which is supposedly made up for by their TSP and social security.

Either group can allocate the TSP between three funds: C, F, and G. The C fund is basically an index fund based on the S&P 500. The F fund is a bond index fund, and the G fund is gov't securities. They can change their allocations 12 times per year.

Federal employees are without a doubt major participants in the current stock market bubble, with their C fund holdings, but it is not that large in comparison to the whole.

Regards,
TW
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