The Thrift Savings Plan (TSP) is the key to a successful retirement for millions of federal employees. Those in the CSRS are not as reliant to the TSP but having the money in a fund that has been building up tax free for a number of years can easily add up to hundreds of thousands of dollars. Anyone who does not have plans for using that money in some way during retirement has probably not been doing any planning.
One characteristic of the TSP is that it has been relatively free from political influence. The TSP invests in stock indices on behalf of investors. The TSP site outlines which index is used for each fund and investors can choose the funds they think will give them the best results for their retirement.
Should the money in the TSP be free from political influence?
The pot of money in the TSP funds is now about $219 billion and, with the long-running bull market, the total is going up fast. In short, the pot is huge and it is only going to get bigger. Baby boomers are dumping money into the TSP preparing for their retirement; federal employees are talking about their TSP balances with each other and comparing notes; and web sites are springing up over the internet telling employees how to manage their TSP money effectively.
With that much money at stake, a person who follows politics in America could predict that Congress would begin looking at that pot of money and seeing many possibilities. Some in Congress just want to get re-elected; some want to help others; some want to satisfy the political action committees who have the “good sense” to donate lots of money to help a Congressman get re-elected.
We have already seen a large amount of money flowing into the coffers of some Congressmen from some in the real estate industry who think it would be a good idea to have federal employees investing in real estate investment trusts (REITS). Perhaps it is a good idea and many readers think they would like this option. What about investing in gas and oil wells? How about putting your retirement money into assets that have gold as the underlying source of support? What about investing in emerging economies in the third world? No doubt, money is already flowing into the re-election campaign funds from industries that see that $219 billion just sitting in index funds when it could be flowing into the assets (and management fees) of other investment funds represented by those sending money to our elected representives.
And there is another possibility of helping out others less fortunate than ourselves with all of that money sitting in the TSP funds. Perhaps, as suggested by a few Congressmen such as Barbara Lee (D-CA), Congress should start telling the TSP folks which companies are acceptable to invest in and which companies are not acceptable.
That argument has some appeal. Who among us would not want to help the beseiged people of Darfur? The new bill in Congress bill would require congressional auditors to investigate the extent of TSP investments in companies that have directly or indirectly had a business relationship with those committing genocide in Darfur and send a report for Congress listing these companies.
No doubt, there is probably a long laundry list of socially responsible things that Congress could list that would help the world. Perhaps GAO should compile a list of companies that are contributing to global warming and eliminate them from the TSP. Numerous countries have been charged with human rights abuses of one kind or another and some American companies and some in the TSP’s I fund have undoubtedly had a business relationshp with governments in those countries. Perhaps Congress should eliminate TSP investments in those countries as well.
There is also a very long list of companies that have helped propel activities that many readers would find objectionable. Numerous companies probably have a business relationship with abortion clinics by selling the clinics drugs and medical supplies. Depending on election results, Congress could help advance this or other political causes by listing companies that the TSP should not invest in because they have participated in some way.
Would “socially responsible” investing improve the performance of the Thrift Savings Plan? Would you, as a TSP investor, prefer to have your TSP investments only being used to invest in companies that are “socially responsible” as defined by Congress or the TSP?
