Monthly Archives: October 2017

USPS Pension Changes are Coming

pension

The United States Postal Service will finally get a change to its employee pension accounts. These pensions will now be calculated using assumptions from its workforce rather than the federal workforce as a whole.

For years, the Postal Service has argued its payments into FERS/CSRS have been too pricey due to the difference between the demographics of its employees and the rest of the federal government. Salary growth differs significantly from other federal agencies and organizations. Postal workers usually remain in a similar pay grade throughout their careers while non-postal federal employees see significant pay increases.

The Office of Personnel Management finalized a rule that allows the Postal Service to make payments into the pension funds using a calculation based solely on its employees.

Back in December, the USPS and its inspector general asked for their calculation to be based on both its workforce demographics and its wage growth. OPM chose to make the payment calculation specific to USPS for demographics only, saying no rule change is required because the board that determines pension liability will use salary information specific to USPS.

Postal reform advocates, along with the USPS, have said it has overpaid into the accounts by billions of dollars. Billions! A 2017 USPS IG report estimated their FERS liability has been overestimated by $4.1 billion due to a growing gap between the salary of the average postal worker and salaries of other federal employees.

The rule will also make additional calculations specific to each class of FERS contributor. Federal employees currently pay one of three different percentages towards their pensions, based on their hire date, ranging from 0.8% to 4.4% of their paychecks.

In 2013, a standalone bill was introduced to require OPM to create a postal-specific formula to determine its pension fund payments. The agency IG said, “The Postal Service cannot afford to make pension contributions that are necessary for future benefits”, regarding USPS’s fiscal difficulties.

Postal Service advocates have long called for the reform. The National Association of Letter Carriers President Fredric Rolanda called it a “nagging” problem. Megan Brennan, Postmaster General cited pension overfunding as one of four key issues that had to be addressed for her agency to sign off on any reform.

There’s no way to tell if this will help the USPS’s fiscal problems, but hopefully, it’s a step in the right direction.

Harris Federal Law Firm helps federal and Postal employees nationwide with federal disability retirement cases. If you have an injury or illness that keeps you from performing your essential job duties, you may qualify for Federal Disability Retirement. Give us a call at 877-226-2723 or fill out this INQUIRY form today.

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Equifax Breach Leads to Cautious TSP Board

board

The Federal Retirement Thrift Investment Board (FRTIB) said Thrift Savings Plan participants may see slower reaction times as the agency processes funds going in and out of TSP. This is because of the Equifax breach that happened recently.

“In some cases, we’re going to have to sacrifice convenience and speed for security. I want out participants to know that their security is our number one priority. I anticipate some of the changes that we’re going to make over the next several months are possibly going to slow down some of our processes,” said Tee Ramos, director of participant services for FRTIB.

The agency already had some of these changes in their plan as a part of updating its IT systems/infrastructure. Now, TSP is taking extra caution as it validates participants’ identities. The Equifax breach put 145 million people and as many as 209,000 Social Security numbers at risk for identity fraud.

“It’s having the ability to make sure that we know who you say you are, with all the, quite frankly, peoples’ data, a lot of things that typically are used for validating are out there in the ether now. We have to come up with new ways to make sure that your money is safe and that’s our ultimate priority,” Ramos said.

Participants will see slowdowns in how quickly the FRTIB processes funds going in and out of TSP. They also may experience slower response times from TSP’s call centers. He said, “We’ve been rolling out lots of things really fast, and sometimes unanticipated bumps happen. We’ve had a couple of unanticipated bumps which have slowed down our service at the call centers. I anticipate that over the short term, that will continue.”

The board has been trying to modernize the cybersecurity of its legacy IT systems for the past few years, but they’ve been more ambitious the last year. Modernizing its IT infrastructure at TSP call centers and implementing Identity, Credential, and Access Management are among the 12 priorities for the next few months.

All this comes as the FRTIB prepares to handle as many as 269,000 new service members to the TSP next year and possibly 300,000-475,000 new participants who choose to opt in the new blended retirement system January 1, 2018.

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Leaked Budget Documents May Be Bad News

budget

Federal employee advocates say proposals outlined in leaked White House policy documents could have an impact on the government’s ability to attract workers. The proposal contained a wish list on federal employee compensation including a pay freeze for federal employees in FY2019. It also included ideas to eliminate the defined benefit program available through FERS and stop new hires from using FEHBP after they retire.

Some officials also advocated slowing seniority-based pay increases by 50%, eliminating the mandatory 25% floor for employee contributions to FEHBP premiums “to encourage greater competition…and to reduce costs,” and bringing federal paid leave benefits “in line with private sector norms”.

If these policies, along with other cuts to federal retirement programs proposed in the FY2018 budget are formally enacted by Congress, they would save over $300 billion over the next 10 years.

Legislative director for National Active and Retired Federal Employees Association, Jessica Klement said proposals are “nothing new” but they would “de-incentivize federal work”. “Essentially what you’re doing is you’re getting attrition without having to actually attrition legislation. The best and brightest would leave public service…. The government would go from being the employer of choice to the employer of last resort. Arbitrarily decreasing federal benefits just encourages a race to the bottom for our country,” she said.

David Kettl is a professor and former dean of the University of Maryland School of Public Policy and he said even though many of the proposals wouldn’t apply to current federal employees they could push people to leave government anyway. “The combination of a salary freeze, an end of defined benefit retirement for new hires and reductions in bonuses would all have a very major impact on federal employees. Conservatives have had these items in their sight for a long time. It’s a reasonable guess that at least some Senior Trump staffers mean to push those items forward—hard.”

He went on to say that the impact may be greatest felt in the recruitment of new federal employees. “Many students are already turning away from the federal government. There’s a sense that there are few jobs and that the hiring process is too hard to navigate. If there’s a sense that the Trump administration aims at cutting pay and benefits, it would make it even harder for the government to recruit new workers—at precisely the time Boomers will be retiring.”

Tony Reardon, national president of National Treasury Employees Union said the union will fight these proposals if they become official. “NTEU has a long history of opposing these recycled policies to cut the pay and benefits of federal employees, and our position on such proposals has not changed. Federal employees are nonpartisan civic servants who want and deserve a fair wage, a secure retirement, and adequate resources to carry out the work of the American people at their agencies.”

Klement said if lawmakers want to bring the government more in line with private sector employment, they should also look to increase pay. “If you really want to bring federal compensation reforms, you’ll have to start paying federal employees a lot more money. You have [members of the Sr. Executive Service] overseeing hundreds, if not thousands of employees—they’re basically Fortune 500 executives—and yet their salary is capped at $170,000 per year. And if you want to bring pay in line with the private sector, you’ll probably have to reform the General Schedule itself.”

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AFEG is Not Happy With VA Proposal

afge

The VA released its proposal to restructure the current Veteran’s Choice Program. The proposal, the Veterans’ Coordinated Access, and Rewarding Experiences (CARE) Act suggests eliminating the current eligibility requirements that veterans must meet to qualify for care in the private sector.

Under the current Veterans Access, Choice, and Accountability Act of 2014, veterans must live 40 miles away from VA facility or wait 30 days or longer to receive care.

“We want veterans to work with their VA physicians to make informed decisions that are best for their clinical needs, whether in VA or in the community, and this bill does just that while strengthening VA services at the same time,” VA Secretary David Shulkin said.

However, the American Federal of Government Employees (AFGE) isn’t thrilled. “This is a step to dismantle, privatize, [and] to avoid hiring these 49,000 vacancies,” AFGE President J. David Cox said.

AFGE has been making a push to raise awareness of the tens of thousands of open positions at VA. “As these vacancies are plaguing the agency nationwide, Congress and the administration are busy patting themselves on the back for eliminating veteran’s rights at work,” Cox said.

AFGE also expressed opposition to the VA Accountability and Whistleblower Protection Act, passed earlier this year, which gives the VA secretary the authority to expedite the review on VA executives’ disciplinary appeals without the Merit System Protection Board. They argued the bill would unravel due process rights for VA employees.

According to the VA, the department has fewer vacancies now. As of September 29, there were 35,345 total full-time equivalent vacancies. Shulkin said he thought the law would improve morale and wouldn’t hinder the departments’ ability to fill vacancies. He said the hiring problem is the biggest challenge facing the department.

AFGE says leaving those vacancies unfilled is “irresponsible” and questioned whether the department is publicly posting those open job positions.

Cox also agrees the department should consolidate the many community care programs that currently exist into one. However, AFGE fears that eliminating eligibility rules will pave the way for a VA “voucher” system for private health care.

Lawmakers have frequently said they’re not interested in privatizing VA health care. “Somebody saying they’re not interested in privatizing the VA and their actions to privatize the VA don’t always match up,” Will Fischer, government relations director for VoteVets, said. “You’re going to hear people say all the time, “Oh, I’m not trying to destroy and privatize the VA.’ Yet they’re going to want to privatize just this little piece over here.”

The VA draft also includes:

  • Proposals for “new workforce tools” to recruit and retain VA medical professionals
  • Business process changes to improve financial management for community care programs
  • Provisions that would strengthen VA’s real property management authority

Congress is also debating legislation that would authorize a BRAC-like commission to realign and close some outdated and vacant VA medical facilities. AFGE believes this proposal for the VA is wrong. “The VA does not need BRAC (Base Realignment and Closure). If the VA has outdated buildings, as there are at some facilities, then yes, those buildings need to be dealt with, maybe they need to be demolished and a new building built. The private sector constantly tears down old parts of its’ hospitals or clinics and builds new ones. A BRAC is wrong. It’s dead wrong.”

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Federal Employees “Nuked” by Lack of Safety?

safety

Federal workers now face a greater risk of injustice at their workplace because of diminishing safety considerations.

After a recent investigation, the Center for Public Integrity (CPI)—a non-profit investigative news organization in Washington, D.C.—concluded that our nuclear weapons complex repeatedly experiences alarming safety problems, including the mishandling of radioactive and nuclear explosive materials, which contaminates work areas that have injured or endangered federal employees at the sites.

During a review of the Uranium Processing Facility under construction at the Y-12 National Security Complex in Tennessee, technical staff at the Nuclear Facility Safety Board (NFSB) identified shortcuts contractors took that elevated the risk of a fire or nuclear chain reaction by eliminating protective barriers that had once been part of the plan.

Despite this, the chairman of the NFSB has told the director of the Office of Management and Budget that he favors downsizing or abolishing its safety inspectors.

Large private contractors that produce and maintain the country’s nuclear arms—most of which also contribute heavily to congressional election campaigns and spend sizable sums of money lobbying Washington—like this idea.

The chairman called the Board a “relic” of the Cold War that performs work duplicative to the safety oversight provided by the Energy Department (DOE) or the National Nuclear Security Administration, which finances the contractor’s work. The chairman has repeatedly voted against sending safety warning notices to the DOE And said that the Board’s recommendations have imposed a myriad of unnecessary costs for the department.

CPI’s Patrick Malone and R. Jeffrey Smith reported to USA Today (Thursday, October 19, 2017 edition) that other members of the Board said the chairman was not speaking for them and argued that other government agencies assigned to safeguard nuclear workers and the public near weapons sites are not capable of handling the task by themselves.

Submitted by Brad Harris, Senior Attorney of the Harris Federal Law Firm. Brad practices federal employee workers’ compensation law nationwide and can be reached at brad@harrisfederal.com or toll-free at (877) 226-2723. 

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2017 Federal Employee Viewpoint Survey

survey

The results of the 2017 Federal Employee Viewpoint Survey (FEVS) show employee responses are moving in a positive direction, OPM announced.

Respondents

A total of 486,105 employees responded out of the 1,068,151 who received it, a 45.5% response rate—the lowest since 2012. Respondents represented 80 agencies ranging from small to large and the highest response rate was in “very small” agencies (with less than 100 employees) at 97%, while “very large” agencies (over 75,000 employees) only had a 64% response rate.

Here is a breakdown of respondents:

  • 28% had/have military service
  • 40% were between pay grades 13-15
  • 49% had agency tenure of 1-10 years
  • 49% were female
  • 34% were a minority
  • 61% field
  • 66% had a non-supervisory status
  • 34% held a bachelor’s degree

Pay

This area also showed improvement. Sixty-one percent of respondents answered positively when asked, “Considering everything, how satisfied are you with your pay?”. That’s the highest positive response since 2013. Forty-one percent of respondents answered positively to the question asking if they felt creativity and innovation are rewarded in their agencies.

When asked if respondents felt pay raises depend on how well employees perform their jobs, only 25% answered positively, however this was the highest percentage since 2013. This was also the question that generated the highest negative response.

Overall Job Satisfaction

The question, “Considering everything, how satisfied are you with your job?” had the highest positive response rate at 68%. The lowest rated question was, “How satisfied are you with your opportunity to get a better job in your organization?” at 37%.

Fifty percent answered positively on receiving recognition for a job well done, 45% about the satisfaction of policies and practices of senior leaders and 55% on satisfaction with training received on the job.

Work/Life Programs

This area of the survey saw some of the highest scores. Eighty-one percent responded positively to their agencies available telework programs and 90% responded positively about alternative work schedules.

Highest Rated Agencies

OPM measures an Employee Engagement Index (EEI) in FEVS, which is a measure of an agency’s work environment. It’s made up of three subfactors: leaders lead, supervisors, and intrinsic work experience.

Here are the highest EEI rated agencies among the five agency categories:

  • Very Small (<100 employees)—Marine Mammal Commission—96%
  • Small (100-999 employees)—Federal Mediation and Conciliation Service—85%
  • Medium (1,000-9,999 employees)—Federal Trade Commission—83%
  • Large (10,000-74,999 employees)—National Aeronautics and Space Administration—82%
  • Very Large (>75,000 employees)—Department of Health and Human Services—72%

Click here for the full survey results.

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2018 Cost of Living Adjustment Announced

living

In 2018, federal retirees will receive the largest Cost of Living Adjustment since 2012—2%. This increase applies to all retirees receiving Social Security benefits, not just federal retirees.

“[This] announcement was eagerly awaited by millions of Americans who rely on the increase to keep up with the rising prices for food, housing, gas, and medical care,” Richard Thissen, president of National Active and Retired Federal Employees Association said.

NARFE has wanted a change in the way the COLA is calculated to better reflect how senior citizens spend money. Currently, the COLA is based on the percentage increase in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year over the average CPI-W for the third quarter of the last year in which the COLA became effective.

This year, the average CPI-W for July, August, and September was 239.668. The average for the 2016 third quarter was 235.057.

If the percentage increase is less than 2%, retirees under FERS receive the full COLA. If the change is between 2% and 3%, FERS receive a 2% COLA. Finally, if the increase is 3% or higher, FERS retirees receive 1% point less than the full increase.

NARFE wants to see the formula switched to the Consumer Price Index for the Elderly (CPI-E). Thissen said, “Our nation’s seniors spend more than twice as much on medical care than the population measured by the current formula to calculate COLA’s, the CPI-W. Congress must act to implement a new formula that adequately measures costs incurred by seniors.”

He also noted that the federal retirees’ portion of healthcare premiums will rise by 6.1% next year. “On top of this, Medicare premiums increase disproportionately for most federal annuitants during the last two years, and long-term care premiums sharply increased by 83%, on average. A new COLA formula that doesn’t force Americans to take one step forward, then 2 steps back is long overdue.”

The new COLA will take effect with the December 2017 benefits.

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Government Contributions May be Changing

government

Some employee groups say that a proposal to change how the government calculates its contributions to premiums in the federal government insurance program could make healthcare unaffordable for workers and retirees.

report that includes a provision that supports changing how OPM formulates the governments’ maximum contribution to insurance premiums through FEHBP was approved by a 216-209 vote in the House.

OPM currently calculates how much the government contributes to insurance premiums based on the average weighted rate of change of all FEHBP plans. The House proposes changing that formula to one that would grow at the “rate of inflation for retirees”. The report also says that the budget proposes basing retirees’ health benefits on length of service. “This option would reduce premium subsidies for retirees who had relatively short federal careers. Together these two reforms would bring health benefits for federal retirees more in line with those offered in the private sector.”

Some groups that represent federal employees and retirees say this could damage the overall stability of FEHBP. “What you could see under this proposal is healthy people running to the cheapest plans. The enrollee would go from paying 28 percent of premiums to over 50 percent in just 8 years because inflation in the medical field far outpaces regular inflation/ It very easily eats it up,” the legislative director for National Active and Retired Federal Employees Association, Jessica Klement, said.

An OPM official said that the agency is “reviewing” the proposal but couldn’t provide estimates on how it would affect FEHBP.

Policy director for the American Federation of Government Employees, Jacqueline Simon, estimated that if the idea is implemented, federal retirees would pay 80 percent of premiums within 20 years, provided inflation and healthcare cost trends continue as they have over the last two decades. She said, “It’s extraordinary. Premiums will go up much, much more than inflation, and that’s how the cost shift would occur. It would be rapid, and it would be large. Depending on if they eviscerate federal pensions as well, it would obliterate most people’s pensions.”

Simon went on to say, “It would be an incentive to go with the cheapest possible plans. But once that happens, then those plans become expensive too, because all the retirees would be in then, including older and sicker people. It’s a recipe for a costly program that basically wipes out people’s retirement and annuities.”

It remains to be seen whether this proposal is likely to be included in Congress’ fiscal 2018 budget.

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Agency Spotlight–History of the CIA

cia

The six years prior to the formal beginning of the Central Intelligence Agency saw many variations of the agency.

Office of Coordinator of Information (COI)

Established on July 11, 1941, the COI lasted 337 days.

At the beginning of World War II, the State Department, Army, Navy, and FBI were randomly collecting intelligence with no direction or coordination. However, they weren’t designed for this type of collection. President Franklin D. Roosevelt tried to solve the problem by creating this office to streamline collection, organization, and dissemination of the intelligence that the government agencies collected. It also was created to conduct unconventional warfare.

The COI’s first operation was debriefing refugees in New York City who fled Europe. The office also gathered intelligence overseas and worked closely with the British to gain information, training, and experience from their intelligence organizations.

As the war went on, Roosevelt moved part of the organization to the Office of War Information to ensure military support. However, he wanted to keep part of it out of military hands. The part that was left became the Office of Strategic Services (OSS).

Office of Strategic Services (OSS)

The creation of this office occurred on June 13, 1942, and it lasted three years and three months.

It had a mandate to collect and analyze strategic information and to conduct unconventional and paramilitary operations. To do this, personnel was sent to North Africa, Europe, China, Burma, and India. However, OSS never received complete authority over all foreign intelligence activities.

A Presidential decree was arranged that effectively banned most of OSS from acquiring and decoding the war’s most important intelligence intercepts.

OSS did eventually develop a capable counterintelligence apparatus on its own, but there was never an expectation they would continue to operate after the war.

Therefore, when President Truman took office in late August 1945, he ordered OSS be dismantled.

Strategic Services Unit (SSU)

The SSU was established in October 1945 and lasted one year and five months.

SSU temporarily took over former OSS posts throughout the world until a more permanent solution could be put in place.

In January 1946, a new National Intelligence Authority was established along with a small Central Intelligence Group (CIG). Later that year, the President and Congress decided to give SSU’s duties, responsibilities, personnel, overseas field stations, communications, and logistical capabilities to CIG. This decision was based exclusively on the challenge of producing coordinated intelligence assessments.

CIG screened all SSU employees and offered positions to the best. CIG then took over SSU.

Central Intelligence Group (CIG)

The CIG was established in January 1946 and lasted one year and six months.

It was responsible for coordinating, planning, evaluating, and disseminating intelligence. It also acquired a clandestine collection capability as well as authority to conduct independent research and analysis. This gave CIG the ability to produce intelligence on its own.

They began spying overseas and became the nations’ primary agency for strategic warning and management of clandestine activities abroad.

However, it was still held under the constraints and resistance from the Department of State and armed forces. To free itself, CIG became an independent department and was renamed the Central Intelligence Agency.

Central Intelligence Agency (CIA)

The CIA was established on September 18, 1947, and was created under the National Security Act of 1947, signed July 26, 1947.

National Security Act

This act merged the Department of War and Department of the Navy into the National Military Establishment. It also created the Department of the Air Force and the U.S. Air Force and protected Marine Corps as an independent service under the Department of the Navy.

Aside from military reorganization, the act established the National Security Council and the Central Intelligence Agency—the nations’ first peacetime, non-military intelligence agency.

The act also loosely defined CIA’s missions and while it didn’t alter the functions of CIG, it did add four basic tasks:

  • Advise National Security Council (NSC) on matter related to national security
  • Make recommendation to NSC regarding the coordination of intelligence activities and departments
  • Correlate and evaluate intelligence and provide for its appropriate dissemination
  • “Perform such other duties…as NSC will from time to time direct…”

In 1949, President Truman signed the Central Intelligence Agency Act authorizing the CIA to secretly fund intelligence operations and conduct several personnel actions outside of standard U.S. government procedures.

By 1953, the CIA was a recognized and respected agency and by the Korean War, it had grown six times in size and three of its current five directorates had been established.

On December 17, 2007, President George W. Bush signed the Intelligence Reform and Terrorism Prevention Act which restructured the Intelligence Community by abolishing the position of Director of Central Intelligence (DCI) and Deputy Director of Central Intelligence (DDCI) and creating the position of Director of CIA (D/CIA). It also created the position of Director of National Intelligence (DNI) which oversees the Intelligence Community and National Counterterrorism Center (NCTC).

Today, the CIA is the worlds’ premier foreign intelligence agency.

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TSP Lifecycle Funds

lifecyclePrevious posts have looked at the I fund of the TSP and why people may shy away from investing in it, and at the other funds—G, C, S, F. Now, we will focus on the L funds in the TSP, or Lifecycle funds.

L Funds

Lifecycle funds use determined investment mixes that are tailored to meet investment objectives based on various timelines (when withdrawals are expected to begin). The objective is to strike the optimal balance between the expected risk and return associated with each fund.

The strategy is to invest in an appropriate mix of G, F, C, S, and I funds for a specific timeline, or target retirement date. The investment mix of each L fund becomes more conservative as the target date approaches. This strategy assumes that:

  • The greater number of years you have until retirement, the more willing and able you are to tolerate fluctuation in your TSP account.
  • For any given risk level and time horizon, there is an optimal mix of G, F, C, S and I funds that provide the highest rate of return.

Each quarter, L funds’ target asset allocation change, moving towards a less risky mix of investments as the target date approaches. When an L fund has reached its target date, it will be rolled into the L Income fund. This fund is the most conservative of the L funds and does the following:

  • Focuses on capital preservation while providing small exposure to TSP’s riskier assets (C, S, and I funds) to reduce inflation effect on your purchasing power.
  • It is also designed to produce current income for participants who plan to start withdrawing from their TSP accounts soon and for those who are already receiving monthly payments from their accounts.
  • Has a set allocation that doesn’t change over time.

Risks

Like the other TSP funds, you are subject to investment risks because this fund is associated with the individual funds.

The account isn’t guaranteed against loss, therefore, L funds can have periods of gain and losses just like the individual TSP funds do.

Rewards

L funds simplify fund selection; you choose the fund closest to your target date.

When you invest in L funds:

  • You can be sure your TSP account is broadly diversified.
  • You don’t have to remember to adjust your investment mix as your target date approaches, it’s done for you.

Here is a look at the different L funds.

L Income

This fund is for those currently withdrawing from their TSP accounts in monthly payments or who plan to begin withdrawing before 2018. The objective is to achieve a low level of growth with a higher emphasis on preservation of assets. Unlike the other four L funds (see below), the L Income fund asset allocation doesn’t change quarterly. However, it is rebalanced daily to maintain the target investment mix.

L2020

This is for those who withdraw their money beginning 2018-2024. The objective here is to achieve a moderate level of growth with a moderate emphasis on preservation of assets. The allocation is adjusted quarterly.

L2030

This fund is for those who withdraw their beginning 2025-2034. Its objective is to achieve a moderate to high level of growth with a low emphasis on preservation of assets.

L2040

For those who will withdraw between 2035-2044. The objective here is to achieve a high level of growth with a low emphasis on preservation of assets.

L2050

This is for those who will begin to withdraw money in 2045 or later. The objective is to achieve a high level of growth with a very low emphasis on the preservation of assets.

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