(January 16, 2013) — The US federal employee pension fund is to be plundered by the country’s Treasury in an attempt to avoid breaching the approaching debt ceiling just a year after contribution payments were temporarily halted over the same issue.
Treasury Secretary Timothy Geithner announced yesterday that the government had begun borrowing from the fund, but it would replace the borrowings once the debt ceiling negotiations were completed.
In a letter to congressional leaders Geithner said the move would free up $156 billion in borrowing authority while Congress debated increasing the $16.4 trillion debt limit.
A year ago, Geithner said employer contributions would be halted until negotiations to avoid breaching the debt ceiling were completed. At that point the debt ceiling sat at just under $15.2 trillion.
The Federal Employees Retirement System is one of the largest pension funds in the world. At the end of 2007 it had liabilities of $1.7 trillion and a shortfall of $878 billion, according to documents published by the US Office of Personnel Management.
The US Treasury has been injecting supplements to the Federal fund for over 30 years in an attempt to resolve the deficit. Since 1979, the department has supplemented the scheme with an annual payment that reached almost $30 billion in 2006. These taxpayer-funded payments were scheduled to increase until 2080.