The Federal Retirement Thrift Investment Board during an April 22 joint meeting with its Employee Thrift Advisory Council, which represents federal employee unions and managers' groups, explored the idea of changing to a new default fund in the Thrift Savings Plan.

Currently, the TSP's default fund is the G Fund, which invests exclusively in a nonmarketable short-term government security that is specially issued to the TSP. Under the board's proposal, the new default fund would be the L Fund--a fund that is tailored to suit participants' retirement timelines.

The TSP is the defined contribution retirement fund for federal workers and other enrollees, such as families and dependents, in the Federal Employees Retirement System, which also provides a defined benefit pension.

Gregory T. Long, the board's executive director, said during the meeting that the change would ensure that federal employees benefit from age-appropriate investments rather than remaining for long periods of time in the safe but relatively static G Fund. As employees get closer to retirement, he said, the L Fund shifts into safer investments to preserve the employees' holdings.

Long noted that the proposed change would not require new federal employees to invest in the L Fund, but would simply shift them into the fund if they do not choose an alternative investment. Federal employees who prefer the certainty of the G Fund would be free to choose that option, he said.

Currently, he said, federal employees who do not make a choice are being put into an investment vehicle, the G Fund, that historically has offered significantly smaller returns over time than other TSP funds. The L Fund is an appropriate investment for those who do not designate an alternative because it offers a relatively safe investment that is likely to provide a significantly better long-term return, Long said.

Although most ETAC representatives at the meeting seemed amenable to the change, Jacqueline Simon, public policy director for the American Federation of Government Employees, expressed concern that it would leave federal employees who are not sophisticated about financial matters vulnerable to market trends.

Such employees "want security, reliability, and guarantees" from the TSP, she said, expressing concern that they might be confused by market dips and vulnerable to suggestions from outside vendors that they leave the TSP.

Long urged the ETAC representatives to gather feedback on the proposal from their member organizations. The board during a meeting this fall will explore the idea further, he said.

In other public sector news:

• Sen. Roy Blunt (R-Mo.) introduced legislation (S. 724) that would allow federal agencies to exempt "essential employees" from furloughs due to sequestration.

• Sens. John D. Rockefeller IV (D-W.Va.) and John Thune (R-S.D.) in an April 22 letter asked Transportation Secretary Ray LaHood and Federal Aviation Administrator Michael Huerta for additional information about how FAA employee furloughs will affect air travelers.

• Two Wisconsin unions filed a motion in state court seeking an injunction that would bar the administration of Gov. Scott Walker (R) from further implementing a 2011 law restricting the collective bargaining rights of most public sector workers.

• New Mexico became the sixth state to regulate employer access to social networking accounts under legislation (S.B. 371) signed into law by Gov. Susana Martinez (R), joining California, Illinois, Maryland, Michigan, and Utah.