And, according to the Thrift Board, stopping people from controlling their own money is their idea of providing for the greater good of the 3.8 million TSP participants. 

But we question that. We only have to look at November 2007, to see that the impact of restricting people from controlling their own money would have devastating impacts. 

For the month, those who were actively monitoring their own investments were able to move quickly to the sidelines, and escape the downward plunge of the markets. The Board recommends holding on and losing money. We advocate that an educated TSP Shareholder is in the best position to monitor and move his or her own assets.

To put things into perspective, TSP Chief Investment Officer  Tracey Ray has advised the TSP Thrift Board that moving money means there is some kind of a financial emergency, because some employees desire to move their money more frequently than she believes is necessary. We believe that is just her opinion, and we disagree.

But she hasn't said how much such a restriction would save the TSP shareholders. That is an important question that hasn't been answered.  How much will the vast majority of TSP's 3.8 Million shareholders "save" by invoking draconian trade limits? 

 And who exactly does the Thrift Board think are being harmed by continuing to have the ability to control one's own money?

 First, it's NOT those who sit in the "G" fund with all their retirement cash. The "G" fund now represents some 33% of the total assets in the TSP, at $76,758,000 dollars as of the end of September, 2007.  If someone is a pure "G" funder, they gain nothing at all from the proposed imposition of trading limits.

And it isn't holders or traders of the "C" fund, as C fund holders now represent 34% of all TSP assets, and trading costs in the C fund are less than 1 basis point, or 10 cents for every $1,000 invested.  Those who hold the C fund aren't making any gain by limiting trades.  Maybe a dollar a year, if that.

Could it be the L funders who are "harmed"?  Some 500,000 employees now place their funds in the L funds.  That's a very wise choice for many people.  Those who cannot or will not learn how to make a better return on their own invest in the L funds.  We support that. But if a typical L funder (L2020 is the largest holdings at 39% of FERS employees holding shares of the L2020) only has a small percentage of his/her account invested in the I fund, which is the fund being cited by Ms. Ray for high costs.

By the way, the L2020 only has 18.1% of it's assets in shares of the I fund as of September 2007. Which means, on an average $70,000 L2020 account balance, means only $12670 is exposed to the I fund.  It also means, that if you left the money alone, as Ray and the Thrift Board suggest, you would have lost -2.33% of you money in November alone. That is a loss of $1633 dollars in November if you simply "bought and held".

Would limiting trades save money?  We don't know for sure. Tracey Ray has not made a public estimate of how much of that 6 basis points she thinks will be saved by limiting trades.  How much? She won't say. She thinks it will save money. 

 We're not so sure.

 Since she won't put a figure on any estimated "savings" by limiting trades, We'll have to make up a figure, just for demonstration purposes. Let's say it's 3 basis points for the year, rather than the 6 basis points that the I fund now costs.  We believe the savings won't exist, but just for the sake of argument, let's say it saves 3 basis points in a year on the I fund. That works out to just 1/4^th of one basis point per month.

That same "L funder" person, by not being able to trade, would have "saved" about 31 cents.   And lost a fixed amount of $1632.70 in November, by not moving to safety.

But if they had "managed their own money", and bought L2020 on November 1, sold on November 6, bought on November 19^th, and held till the end of the month, they would have made  $2,009.59 in profit.   On just three trades in a month. Three is above the limit that the TSP Board is proposing.  

Is it worth saving 31 cents, to give up the ability to make $2,009.59?  

It is, under Tracey Ray's math.

She says restricting the ability of a person to control their own money and saving 31 cents is more important than allowing a person the right to control their own destiny.

While it is true that not everyone can pick the highs and the lows of the market, anyone who manages their own money can make an educated guess of the direction of the market's travel.  And can judge their own level of risk and reward, to determine if they want to be in the markets, or out.  We're adults, not children. Our actions are not "harming" anyone.  The cost of doing business is minimal. And it's important to a lot of people to maintain freedom in our democracy.

And we believe Tracey Ray, and the Thrift Board, are missing the big picture.  It's not THEIR money at risk.  They need to stop frightening TSP shareholders by claiming that the costs to their accounts are being damaged. It's simply not true. It's not hurt any of the "G" funders at all. And it's cost less than $4 per year per person overall to maintain freedom, less than the costs of compiling, printing, and sending out yearly statements to members.

Remember, for a $70,000 L-2020 account holder in November, limits MAY have saved  him perhaps .31 cents. 

And cost them the freedom and opportunity to gain $2,009.  

Freedom in America is important. 

TSP Thrift Board needs to understand that.

TSP Goes retro.....

Remember when?

Flashback.....June 16, 2003, the TSP goes LIVE with their daily trading plan.....as reported in Govexec.com

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House committee to investigate TSP system
By Tanya N. Ballard tballard@govexec.com
July 17, 2003


The House Government Reform Committee will review customer service problems associated with the Thrift Savings Plan's new automated record keeping system at a July 24 hearing, a committee spokesman said Thursday.

Six years in the making, the new automated record keeping system was finally launched on June 16 only to encounter Web site problems. While TSP officials tried to fix the problems, they advised participants to access the system by telephone, but the subsequent barrage of calls to the system prevented some participants from getting through. The delays increased the frustration many participants had harbored over the years of delays and the millions of dollars spent building, then launching the system.

"People are very upset and we understand why," TSP spokesman Tom Trabucco said Thursday. "We know we have a problem with the phones and we are working on that."

Under the new system, federal workers should be able to make daily changes to their Thrift Savings Plan investments, a significant change from the monthly upgrades provided under the old system. The 3 million TSP account holders should also be able to access their account balance updates each day, transfer money from one fund to another, change the amount of their monthly payouts after they retire and make a partial withdrawal of money, rather than a full withdrawal, as soon as they retire. Another feature of the new system allows participants to submit loan applications electronically, though there is still a paper-based step for married Federal Employees Retirement System (FERS) members, according to Trabucco.

"The TSP new system may be up and running, however it is near impossible to reach anyone by phone or complete the application electronically as was promised and advertised as a special new feature," a federal employee recently wrote to GovExec.com. "It's one thing to say the system is working. It's quite another to say so when it is patently not true. In fact, saying the TSP is working is like [President] Clinton saying he didn't inhale or have an affair with [Monica] Lewinsky. It may be true, but only if words are redefined."

During the past month, many GovExec.com readers have complained that their loan applications seem to be in limbo, interfund transfers have not been completed, and attempts to contact someone for help have been futile.

According to Trabucco, 106,641 interfund transfers were processed and 12,120 loans were issued as of July 15, but a data entry backlog has created some problems.

"We do have a backlog of data entry work and that includes loan repayment checks, paper loan applications and paper withdrawal applications, but we've brought more resources to bear on this and are working through it," Trabucco said. "What we are trying to do is work through, in particular, this data entry issue and get those moving through. We think that things will be improving when that's done."

Trabucco also noted that the Web site is handling as many as 50,000 transactions an hour, with the highest volume of Web site hits occurring between 8 a.m. and 12 p.m. EST.

The board hired American Management Systems in 1997 to modernize the computer system and give federal employees more tools to manage their 401k-style retirement accounts. The $30 million project was supposed to be completed by May 2000, but when the implementation date was moved back four times and the budget tripled, the board fired AMS in July 2001. The board sued the Fairfax, Va.-based company for $350 million in damages and AMS filed a breach of contract suit against the board. Recently the two brokered a settlement in which TSP participants will pay $36 million for the failed contract, along with the more than $33 million paid to the contractor who took over the project after AMS was fired.