Treasury to require Payroll Savings Plans to use electronic bonds
Tuesday, April 20th, 2010
Categorized as: Buying US Savings Bonds • Savings Bond news
The Treasury announced yesterday that it intends to stop issuing paper Savings Bonds through Payroll Savings Plans by the end of the year. Participants will have the option of switching to electronic Savings Bonds using TreasuryDirect.
The Treasury’s 2009-2014 strategic plan, released in August 2008, includes a goal (page 17) for its Retail Securities Division to “Position Treasury to eliminate new issues of paper Savings Bonds,” and this is one more step in that direction.
For now, however, paper Savings Bonds are still available to individuals.
Here is the relevant section from yesterday’s press release:
Treasury will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees on September 30, 2010 and for the private sector by January 1, 2011. This policy covers only paper savings bonds purchased through payroll sales; individuals will still be able to purchase paper savings bonds at financial institutions for themselves and as gifts. Payroll savers will be encouraged to continue their purchases through TreasuryDirect, a web-based system that allows investors to buy and hold electronic savings bonds. Transitioning employees to electronic payroll purchases saves employers administrative costs and allows employees to manage their own bond accounts. This is estimated to save nearly $50 million in the first five years.
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Tom Adams
The saddest part is that this goal to eliminate new issues of paper bonds will reduce the current annual limit even more from $10k ($5k each, paper and electronic) to $5k.
This is only speculation of course, but coming from a $60k annual limit just a couple years ago to $5k with this goal, could the Treasury be considering just scrapping the savings bond program altogether?
You can also take a peek at the FAQ.
Increasing the limit to 10k electronic and/or linking future increases to inflation would certainly be nice, but I won’t hold my breath.
This is sad news for the American worker. Most employees enrolled in our payroll savings bond program will not trust electronic savings programs and will be forced to give up their only means of saving. It makes me feel very sad that our Government would do this to the average American worker. This is a disgrace.
After 20 years of purchasing payroll savings bonds I will not purchase them electronically. Too bad the government decided to “save money” by doing this. How much will they save when all people like me stop purchasing them?