GovernmentExecutive.com

Stability is one of the government's major selling points when promoting public service employment.

Consider financial benefits. The Thrift Savings Plan offers participants strong returns at some of the lowest costs in the industry. Health benefits are stable, too. While many companies are moving away from guaranteed health benefits, cutting coverage such as dental and vision or requiring new employees to wait until they have completed probationary periods to be covered, the Federal Employees Health Benefits Program has expanded its offerings, adding vision and dental programs for federal employees.

But the past several months have been a tough reminder that as strong as federal benefits are, they are not immune from market forces.

Markets worldwide have stumbled under the tight credit crunch, and the Thrift Savings Plan is no exception. During the first three months of 2008, the TSP's stock funds have fallen between 9 percent and 10 percent while the bond fund, which is less dependent on the equity market, grew 2.26 percent and government securities fund rose 0.9 percent.

Federal Retirement Thrift Investment Board Chairman Andrew Saul said publicly in a recent Senate hearing and more privately in an FRTIB meeting this week, that federal employees should not attempt to anticipate fluctuations or game the market. Because the TSP is basically an index fund, as the stock market goes, so go their savings. Saul has the unenviable task, along with other TSP board members, of convincing federal employees that this recent downturn in the market will pass, and that sticking to a steady investment plan with a long-term outlook is their best bet.

Government Executive's report last week that many federal health care plans require that participants pay more for so-called specialty drugs demonstrated that employees may be protected from the economic pressures that their private sector counterparts face, but they can't escape them entirely.

It's not clear yet how the companies that offered these pricing plans developed them or how many federal employees have been affected by higher prices for some of the drugs that treat anemia, hepatitis C, multiple sclerosis, rheumatoid arthritis and certain kinds of cancers. But it's undeniable that drug prices in general are increasing, and someone, be it pharmaceutical companies, insurers, plan enrollees or the federal government, will have to pick up the tab.

But there are also indications that federal employee benefits are basically strong. It took massive disruptions in the stock market to affect the TSP's performance to a significant degree. And FEHBP may not be perfect, but the federal government has avoided the draconian steps some employers have taken to cut health care costs.

In both cases, educating federal employees about the funds and health plans will not fix the problems that they face, but it can help them avoid situations that will leave them in a financial pinch. Insurance companies and the Office of Personnel Management have an obligation to flag as early and aggressively as possible changes in coverage that will affect costs. And they have a responsibility to do it in plain language. With any luck, the upcoming briefings the TSP board has planned for federal employees will help spread Saul's message far and wide.

After all, one thing that federal benefits have in common with private sector offerings is this: They exist in a tangle of bureaucratic language that disguises critical changes and offerings. Federal employees live in an unpredictable world. The more help they have to navigate it, the better.

COMMENTS

• As many of us "boomers" head toward retirement, we should state loud and clear that we've taken financial hits long enough. When FEHB benefits for dental and eye care have the option of self plus one, why can't we have the same option for out regular health insurance? It's a big difference in premium dollars between self only or the family option. Sue Posted April 29, 2008 3:03 PM
• It hasn't been that many years since interfund transfers were limited to one per month period. The change to twice a month with subsequent transfers to the G-fund only doesn't seem unreasonable. TSP was never intended to be an employee's day trading investment plan. Kathleen Howard Posted April 29, 2008 8:05 AM
• We did not bring FERS in and make ourselves responsible for our own retirement. The government did to save themselves a little money at our expense. And now the board steps in to further limit our options. Though the board admits that there has been a 10% decrease in value. It is interesting that board has not assigned dollars amount to it. Folks, it is in the BILLIONS of dollars of loss value. And they want to make it harder to avoid these situations? Is someone smok'n crack around here? Neil Posted April 28, 2008 7:51 AM