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Pension Funds

Treasury secretary halts payments to 2 retirement funds as debt ceiling is restored

Treasury Secretary Steven Mnuchin has notified congressional leaders of his decision to suspend investments in two federal retirement funds to prevent exceeding the debt ceiling.

The funds — the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, which had assets of $269 billion and $50 billion, respectively, at the end of fiscal year 2017 — will be made whole once the debt limit is increased or suspended, Mr. Mnuchin wrote in a letter Monday. Federal retirees and employees will be unaffected by the moratorium, he added.

The debt ceiling went back into effect Monday after it was suspended in February 2018 through a budget deal. According to the Congressional Budget Office, unless additional legislation either suspends or increases the limit, existing statutes then allow the Treasury to declare a "debt issuance suspension period" and to take "extraordinary measures" to borrow additional funds without breaching the debt ceiling.

If the debt ceiling is not raised or suspended again, the Treasury will probably run out of cash near the end of fiscal year 2019 or early in fiscal year 2020, CBO projected in a February report.

The issuance of new securities to the CSRDF and PSRHBF totals about $3 billion each month, according to the CBO report.

"I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible," Mr. Mnuchin wrote.