Treasury Borrowing from Civil Service Retirement Funds as Nation Hits Maximum Debt Ceiling: How this Impacts Your Retirement Benefits
Earlier this week, Treasury Secretary Timothy Geithner announced that the government had reached the national debt-ceiling, the maximum amount the government may borrow to fund its obligations. In a letter to key leaders in Congress, Geithner explained that he will be borrowing funds from the Civil Service Retirement and Disability Fund (CSRDF) and the Government Securities Investment Fund (G Fund) in order to prevent the government from defaulting on its loans. Until elected officials can agree to raise the debt ceiling, the government will continue to borrow from federal workforce retirement funds.
This announcement has left many federal employees concerned about their benefits and whether or not they will be receiving the retirement funds they have earned. By law, the government must make these funds whole once a debt ceiling increase is passed. This means that in the long term, all obligations will be met. If a debt-limit increase is not passed before the retirement funds run out however, there may be some interruption in benefits, in addition to disruptions in other federal services.
Treasury released a packet of frequently asked questions on their policy of borrowing from civil service retirement funds. Click here to access the Treasury FAQs.