Federal Benefits Service

Potential Pay Freeze For Federal Employees, TSP I Fund Expansion Halted

Federal (civilian) employee pay could be frozen in 2021 under a new bill that was released on Tuesday from the Republican leadership of the Senate Appropriations Committee. This bill is in contention to the 1 percent raise the White House has recommended and that the House effectively has supported, creating further debate surrounding the topic of federal pay.

The House has passed its version of that bill as part of one of two packages, combining 10 of the regular bills together.

Due to being absent of a vocalized opinion on a raise, the House has effectively allowed President Trump’s proposal for a 1 percent raise to be paid across the board, with no locality component. If Congress does not take an affirmative position on a raise, it will take effect. The Senate bill does not provide a raise, so no change would occur to Trump’s 1 percent plan.

This government appropriations bill was released in lieu of the impending December 11th expiration of a temporary funding measure for the fiscal year. It is only a Senate draft version, and is one of a dozen regular funding bills that are far behind schedule due to the tumultuous nature of 2020. Usually initial bills like this one are normally released in the spring.

The House has passed its version of that bill as part of one of two packages, combining 10 of the regular bills together.

One such addition in the Senate bill contains another provision that is not in the House-passed measure, that will effectively stop the TSP from expanding its international stock I fund to include stocks of Chinese companies.

The initial plan in the spring of 2020 to expand the I fund to include some two dozen more countries, including China, was put on indefinite hold by bipartisan lawmakers who criticized the TSP’s plans to expand the international fund into emerging markets.

Countries like China, that do not meet particular accounting standards, specifically American accounting regulator inspections or oversight, would be barred from I fund investments.

In response to this, the TSP pulled back on these plans earlier this year amid pressure from the White House.

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