How the Federal Reserve is affecting Federal Employees

Most Federal Employees are now covered by FERS as the number of employees covered by the old retirement system is rapidly decreasing.   Since a significant part of FERS involves the TSP many investors have their money in the G Fund.   The G Fund is tied to the 90 Day TBILL and as you can see in the chart below both have been trending lower for the last several years.  In the late 1980's the G Fund was returning close to 9% but has now fallen down to 2.45% in 2011. 

Meanwhile the return on the 90 Day TBILL is basically "0%".  On the positive side with the 90 Day TBILL returning near 0% that means the G Fund probably has reached rock bottom.  However on Wednesday the Federal Reserve said they are going to keep Interest Rates near current levels through at least 2014.  What that means for Federal Employees is that the returns in the G Fund will remain extremely low and may remain under 3% for the next 3 years (2012, 2013 and 2014).   At this point you really have to question the policies of the Federal Reserve by keeping rates at an extremely low level for another 3 years which is basically screwing Federal Employees who keep their money in the G Fund.