Divorced spouses and children of federal workers will get fairer interest on retirement payouts

The federal agency managing the Thrift Savings Plan wants to change how it calculates earnings on court-ordered payments to former spouses and dependents. This means these payments will now reflect the actual gains or losses of the retirement fund, rather than a fixed interest rate.

For years, court-ordered payments from federal retirement accounts earned a fixed interest rate, often lower than the fund's actual performance. This change means that if the fund does well, the recipients of these payments will also see their share grow more. It ensures that dependents and former spouses receive a more equitable portion of the retirement savings, reflecting the true value of the account.