In 1984 the Federal Government needed a new pool of money to steal from so they invented the “Federal Employee Retirement System” (FERS). There was no “economic boom” in the 80’s, there was simply living large on a credit card. Spending now with the “promise to pay” later. Reagan took a modest national debt of around $920 billion and turned it into a staggering $2.7 trillion dollars. The “80’s boom” simply indentured our progeny into being debt slaves. We sold out future generations while calling it “trickle down”.
The Civil Service Retirement System (CSRS) was fair and protective of the employee, but it didn’t create a pool of money that Congress could then steal. Hence: the Thrift Savings Plan. Most people are so stupid they don’t realize there is nothing in the “lockbox” or trust fund of SSA and Medicare, that has long ago been stolen by Congress. As has been noted before, a standing pile of money cannot remain untouched in Washington, it has to be stolen. Its diabolical really. Thrift Savings Plan (TSP) money went into the employee’s 3rd leg of the retirement plan, into government bonds, securities and the stock market.
This new pool of money existed solely on paper. It went out as soon as it came in. In its place Congress put an IOU. And as the Federal Government is the nations largest employer this worked out pretty well. What had been the world’s largest Ponzi Scheme, SSA, now had some help. If that betrayal wasn’t enough, Congress added several twists. When they switched to the new system in 1984, it was 30 months before they had a fund for employees to put their money in. The G Fund wasn’t created until April of 1987. They in effect stole 2 1/2 years from the workers. They stole the time value of their money. They didn’t have the S&P 500 index, the C Fund for 4 years, 1988.
Not only did they steal the time value of our money, they gave us no education on what to do with it. They took the perfectly protected CSRS system, and turned us FERS folks over to the wolves. A self directed retirement system is fine, but you GOT to give us some guidance! We promptly went out and made every investment mistake in the book. Our unions were of no help, all they talked about were the political machinations going on in Washington. God forbid there was an “Investment Corner” in each months magazine giving tips. God forbid they gave us some help in the whole point of working – retirement. Our unions think the whole point of our working is to fund them.
So you make it to the end of the road. You retire. 30 years of faithful service to the government, and the screw job gets worse. You have to prove your life to the government. I know it sounds strange, but its true. Everything you had to document during your 30 years (whether you had military service, or you were married, or had children, etc.), you had to prove again with birth certificates and marriage licenses and DD-214s and the like.
Despite making every investment mistake there is during your career, you end up with a few hundred thousand dollars and its time to decide how to get it out. One option is to purchase a guaranteed monthly income for life through an annuity. Sounds good, so you fill out the paperwork and send it in. Then you realize you just gave them authorization to take your life savings, and they have promised you nothing. YOU had to go to the notary public to prove your existence and sign your life away, and they are on paper for NOTHING. You get the contract AFTER you purchase the annuity. Just trust us. We’re from the government and we’re here to help.
FERS has been a screw job from the start, and it continues to the very end.