What Annoys Jeff this Week?

Thrift Savings Plan. One of the non-salary benefits that makes federal employment at least nominally attractive is access to the Thrift Savings Plan, a low-fee 401(k) style defined contribution retirement plan. The TSP website has always been a little bit clunky, but with only five basic funds and five target date funds to manage, it didn’t need to be particularly complicated. And that’s where the Thrift Savings Board, the fine people who run the plan, decided to revamp everything. The transition to a new web interface and record keeping system started in May and by the 26th the process was far enough along that users were effectively locked out “until the first week of June.” Well, as predictable as it is, the rollout of these “new and improved features has proven to be absolute hot garbage. I’m one of the lucky ones that managed to set up a new log in without causing the system to crash… even though I still can’t do anything once I’ve signed on. With millions of account holders and $750 Billion under management, you might be tempted to think there would be an incentive to get this rollout right. You would, of course, have been 100% wrong. The Thrift Board and whatever contractor the picked to develop this wonder-system have delivered up a complete and total turd.

Inspection. My bathroom remodel contractor has spent the last week and a half working great guns to stay on schedule. They left around lunch time yesterday and aren’t here at all today because work is at a dead stop until the county inspector comes by to do his or her thing. That might be tomorrow. It might be next week. Per the project manager and a call to the county office, “There’s no way of knowing.” I’m sure these county inspectors are doing God’s own work, but letting bureaucracy grind a project to a stop without giving a date-certain when they’ll even bother to consider giving approval for more work to get done is infuriating on just about every level. It’s the kind of thing that leads people to decide government is the problem rather than being part of the solution.

The BBC. First off, let me say I love the BBC. They’re one of my top two or three go-to news sources and provide the lion’s share of what television I actually still watch. I use to be able to stream some limited live events from their website. Apparently, I can no longer do that, being met by a banner that says “This content is not available in your location.” By my location, I assume they mean across the waters in the United States. Hey, look, I know the Beeb has its own bills to pay. I’d be happy to sign up for a subscription or a pay a license fee or whatever. I know there are ways to circumvent all that, but I’d rather just hit an easy button, pay a few dollars, and get on with it on the up and up.

Gordon Gekko versus the do-gooder Senators…

The Thrift Savings Plan (hereafter TSP) is billed as the world’s largest defined contribution retirement plan. Having in excess of $700 billion of assets under management, I’m sure it makes a very tempting target for politicians looking for some new and interesting way to make their mark or get their name in the papers.

Most recently, Senators Bob Menendez (D-NJ), Alex Padilla (D-CA), Ben Ray Lujan (D-NM), Sherrod Brown (D-OH), Jeff Merkley (D-OR), Tim Kaine (D-VA), and Cory Booker (D-NJ), have sent a letter of interest to TSP’s managing board encouraging them to increase the presence of “racially, ethnically, and gender diverse asset managers” overseeing this giant pot of money.

That’s fine, I suppose, if what you’re into is some kind of feel good, hold hands, and sing along kind of moment. When it comes to TSP, though, the only thing I care about is that the fund managers are the very best money makers that can be found for the job. I want the people in charge of growing my principal retirement account to be relentless and absolutely ruthless in finding better returns. It’s simply never occurred to me to care whether they also happen to be black, white, brown, yellow, straight, bi, gay, men, women, or other.

However admirable the above listed senators believe their goals may be, when it comes to managing a vast portfolio for millions of current and future retirees, the old adage is true – if it doesn’t make dollars, it doesn’t make sense. As such, I’d encourage these distinguished members of the US Senate to take their genuine imitation do-gooder tendencies and pandering elsewhere.

Maybe I should just run for Congress. From the sounds of it, getting your jollies by telling other people how to live their lives or what they’re supposed to care about is a far better way to feather your nest anyway.

What Annoys Jeff this Week?

1. Timing. The 76 billion cicadas camping in my back yard are fine – aside from the dogs wanting to eat all of them. I generally don’t get freaked out by bugs. Their early morning screeching is what I’d charitably describe as “troublesome.” It’s made my favorite pastime of sitting on the patio for an hour each morning with coffee and a good book decidedly unpleasant. I know they’re temporary, but the little bastards are stepping all over the last days of full-time working from home. That’s just exquisitely bad timing… and I hate them for that.

2. Eligibility requirements. Marylanders who received the COVID-19 vaccination are eligible for daily drawings for $40,000… unless you’re one of the Marylanders who got the “federal” vaccine instead of the state jab. That puts me out of the running. Would I have waited a few more weeks to get the vaccine if I knew I could win a sweepstakes? Maybe. I suppose the world will never know… but I want my damned money.

3. Good intentions. The people who control the Thrift Savings Plan, the federal government’s version of a 401(k) retirement plan are being pressured to make two significant changes to how the fund is managed. The first would see the TSP divest from fossil fuel securities, with an eye towards, supposedly, making the investment funds “environmentally conscious.” The second major change would be driven by proposed congressional legislation to prohibit TSP from investing an any company based in China. Maybe both of those are admirable objectives and people should feel free to target their own money in whatever fashion they want… but for the TSP in general, which bears the lion’s share of responsibility to secure federal employees’ retirement. Personally, I want fund managers laser focused on driving down costs and maximizing return on investment… while keeping the “good intentions” of socially crusading politicians as far away as humanly possible

A tempting target…

Back in April, Senators Jeff Merkley of Oregon and Maggie Hassan of New asked the GAO to launch a study on “risks that fossil fuel stocks currently present” to those invested in the federal government’s Thrift Savings Plan (TSP). The distinguished senators then go on to imply that the TSP should create funds that “incorporate climate change risk” as part of the 401-k style program’s offerings.

Part of the allure of the TSP is its remarkably small fee structure – it’s very cheap in comparison to many other funds. Fees are low, in part, because TSP is simple. It’s got five basic index funds and five “lifecycle funds” that automatically reallocate participant’s money based on target dates. It’s got an elegant simplicity that’s historically effective at creating wealth for its participants over their long careers.

Look, I accept that climate change is a real thing. I also don’t have any particular love of the energy sector – many leaders in the area are losing value. That’s my real issue with them, though. If we’re going to drop energy companies from a portfolio, do it because they’re not making us money – not because some holier-than-thou senator wants to score a few political points.

Congress never saw a big pot of money sitting around that it didn’t want to stick its whole hand into. With $500 billion in assets under management I can understand why the TSP is an awfully tempting target. That said, the very last thing I want to see is a good thing turned on its ear by driving TSP to respond to whatever political views happen to hold sway at any given moment. Treating retirement funds as just another political football is almost a guaranteed way to manage to take another slug of cash out of my pocket.

There are already fund options out there for just about any special interest that wants to play in the market – whether your “thing” is gender diversity, sustainable energy, human rights, or a laundry list of other causes. TSP should remain a broad-based set of fund options targeted at replicating the market overall and building wealth over time for the wide swath of federal employees. Catering to the few individuals who can’t seem to be satisfied with that just doesn’t make senses… unless of course you’re more interested in enforcing ideological purity than in making good financial decisions. Surely no member in the United States Senate could ever be accused of that.