Longest government shutdown’s impact on the Thrift Savings Plan
Kim Weaver, director of external affairs at the Federal Thrift Investment Board, discusses how the government shutdown affected the Thrift Savings Plan, and pending legislation to make loans and withdrawals easier for federal employees.
During the partial government shutdown, thousands of federal workers were pulling money from their Thrift Savings Plan accounts. Kim Weaver, director of external affairs at the Federal Thrift Investment Board, says that while they’d seen high rates of hardship withdrawals during previous government shutdowns, this case was different.
“We reported that we saw a 26% increase in people taking a hardship withdrawal from their account, and a 5% increase in loans.” Weaver said. “In 2013, we similarly saw an increase in hardship withdrawals and loans during the October shutdown. But this lasted longer, and I think people weren’t clear on when they would get their next paycheck. There was a higher level of anxiety that we received.”
The Federal Thrift Investment Board is supporting legislation that would overhaul the process for federal employees making hardship withdrawals from their accounts. Weaver says that the bills each would assist workers who are in tough financial situations.
“The bills all had the same flavor, which was allowing TSP participants to access their money largely without penalty. Hardship withdrawals, you have a 10% penalty, and in different ways they would allow participants to take their money out without penalty and repay it, which is not a feature of a hardship withdrawal,” Weaver said. “We are supportive of that. It is based on laws that are passed to help victims of natural disasters.”