Bill Would Create 'Socially Responsible' TSP Fund

By on November 25, 2013 in News

Congressman Jim Langevin (D-RI) and Senator Sheldon Whitehouse (D-RI) have introduced legislation that would allow federal employees to make socially responsible investments (SRI) in their retirement plans.

Known as the Federal Employees Responsible Investment Act, the legislation would direct the Federal Retirement Thrift Investment Board to select a “Corporate Responsibility Index” as an option for Thrift Savings Plan (TSP) contributions by federal employees – allowing them to direct their retirement investments toward socially responsible corporations, and away from ones with poor environmental and human rights practices.

Langevin has been a strong advocate for socially responsible investment, championing legislation in the House over the past five sessions of Congress.

“I strongly believe that federal workers should be able to invest in companies that demonstrate a commitment to sound environmental, social and governance practices,” said Langevin. “This legislation would allow federal employees to feel good about their investments, and would encourage companies to implement socially responsible and environmentally sustainable policies and practices. Investors are increasingly turning to socially responsible investment options because good corporate practices are often an indicator of good management, financial success and long-term stability.”

The notion of having investment options such as this within the TSP is not new. We have reported in the past on discussions from within Congress to push for “socially responsible” funds. See for example Socially Responsible Investing Through the TSP and Your Retirement Security and The TSP Pot is Growing Fast: Will Congress Resist the Political Opportunities?.

A survey we ran around that time indicated that many of our users didn’t like the idea of Congress dictating the types of investments within the TSP.

Langevin’s bill, however, would do just that. It would set up a Corporate Responsibility Index that would include “a broad index of stocks of companies that maintain strong corporate governance, sustainable environmental policies and practices, solid workplace relations, positive community involvement, safe products and respect for human rights around the world.”

As Senator Whitehouse put it, “This legislation will allow millions of federal government employees and retirees to use the power of their individual purse to tell big polluters they can’t keep poisoning our air and water without consequences.”

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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  1. Yunzer says:

    It seems to me that having the option of a socially responsible fund that employees can select would be a great idea. But, I’m confused as to why an act of congress is needed to do this.

  2. Bravefart says:

    Think the companies in the “Socially Responsible TSP Fund” won’t give generous thanks to those socially conscientious Congressmen who helped them gain access to all those millions of dollars? That’s what this comes down to – nothing green, indifference to human rights,etc. Like everyone is saying here, the government just needs to leave OUR money alone!!! Our three-legged pension stool is slowly but surely being whittled out from underneath us. If legislation is to be introduced concerning the TSP then the members of the TSP should decide by a democratic vote whether WE want this legislation or not. Isn’t Congress supposed to represent US instead of going around us?

  3. Mentallect says:

    I’d prefer a bill saying the Congress cannot borrow against federal pensions, tsp, or social security for any reason, and the penalty is life without the possibility of parole on first offense.

  4. sinead9191 says:

    Where do these so-called socially conscientious congressmen get the gall to dictate how OUR savings are permitted to be invested? How dare they touch OUR money! If they get away with this, just wait and see how they find a way to “borrow” from our savings! Look what happened to Social Security when the White House and Congress meddled and fiddled with that so-called supplemental retirement savings. Suddenly everyone who had never contributed into Social Security was receiving its benefits — so that my children and grandchildren will probably never receive a penny when they retire, even though their grandparents, parents and they themselves have paid into the fund their entire working lives! And, what happens to all the money paid into Social Security when the payee passes away just prior to receiving benefits? It is pulled back into the fund if there are no dependents eligible to receive it under their clever rules — to pay for someone else who never contributed. I am totally sick of being at the mercy of these spendthrifts in Congress who try to think of ways to tax us more or to take what doesn’t belong to them — just to fund their boondoggles! It has to end!

    • MontanaMom1 says:

      I agree, but do not forget to mention that this bill is supported by a Democratic Congressman as well as a Democratic Senator. Bills just don’t start in Congress to see if they can make it through the Senate; most times it is the opposite. The Senate pushes through to Congress. Which came first? The chicken or the egg? My guess the egg came from the Senate (chicken). Are the spendthrifts really in Congress?

  5. Fed-Up American says:

    Problem is that this government thinks socially responsible is giving everything to people that don’t work to have it. I just retired and come the first of January, I am taking my money out of the TSP!

  6. RetiredEngineer says:

    I’m new to this discussion, so I have one newbie class question. Why is there concern about adding another investment category to the current TSP categories (G,F,C,S,I)? There is no requirement I know of to move funds into any category, let alone a new one.

    Can someone please help me understand the TSP regulations better?

  7. Stewie Griffith says:

    I really don’t see the problem allowing the listing of a socially responsible investments as long as we know who is the responsible party determining what constitutes a SRI, and why. The other thing is it should not interfere with current selections being offered. Intelligent decision making on behalf of the investor needs to be part of the equation.

  8. Deputydoright says:

    Taxpayer dollars were gambled on “green” companies like Solyndra, NextEra, Ener1, Solar Trust and many others — all of which went bankrupt.

  9. Norm from GA says:

    Aren’t these the same geniuses that tried to get us to invest in REITs in 2005, just before the housing bubble popped? If they can’t balance, or even produce, a budget, at least make them leave our retirement funds alone…

  10. Serf in USA says:

    I want a socially irresponsible fund; one that always performs because it has all the purveyors of sex, drugs, war, and oil. Maybe even WalMart ! Oh wait, we already have one, the G fund c/o the U.S. govt….

  11. Steve Neal says:

    We the sheeple, without meaning to, have let congress and the executive branch extend their previously limited power into areas in our private lives where we just don’t need (or want) their direction. I’ll leave the ObamaCare debate to others as it continues to die a slow painful death from “new user awareness”.

    Like several others have replied, just who is making the “Corporate Responsibility” (socially responsible) judgement call? I like career politicians at least outside arms-reach of my wallet and even farther away from my future retirement nestegg…

    • MontanaMom1 says:

      The Senate always has a gun to the head of Congress; get real. I agree with BigHorn!

  12. steve5656546346 says:

    Politicians determining what is “socially responsible”? What do they know about such things?

  13. Deputydoright says:

    The TSP fund as an investment vehicle has been a disaster since fund management decided to restrict interfund transfers to 2 a month. The whole point of letting an employee take charge of their financial future, was to let them take charge of their financial future.
    Now, the nanny state wants me to invest in socially responsible investments so I can feel better about not making the returns I think I should be getting. I suppose next, they will want me to do a family vacation in Benghazi.

    • Burgerwars says:

      The fund itself made that decision, not Congress. Too many were trying to time the market by making a humungous amount of transfers a month, as recommended by newsletters. The fund itself was incurring large transaction fees which gets passed along to all participants. As far as a socially responsible fund, I wouldn’t touch it with a ten-foot pole. Who’s making the decision what is socially responsible? It’s nonsense. Some might not think investing in a fast food restaurant chain is responsible (obesity) while others thing it is. An oil company may or may not be socially responsible depending on your point of view. It will never end.

      • retired worker fed says:

        No one is forcing anyone to invest in it.

      • Scott says:

        They could simply charge a small fee for interfund transfers beyond the allowed 2 per month. I am sure the small percentage who were moving funds on a frequent basis would pay it, or if it were too costly not to, but at least the option would be there.

        • Deputydoright says:

          A voice of reason in the crowd. You are right Scott. I would be willing pay extra to manage my own portfolio. Fidelity can do this. Vanguard can do this. We can’t do this because the TSP management folks think it a bad idea for participants to be able to have management tools at their disposal.

      • Deputydoright says:

        Just whose responsibility is it too decide what is humongous? Is humongous 6 trades a month? Or is it 10? We went from unlimited trades down to 2 a month in the normal knee-jerk reaction that plagues government organizations everywhere. I recognise that it cost the fund at large for individual participants to make trades. So what! Market timing has inherit risk and I alone bore those risks. Not the fund at large. I didn’t have to be right all the time at market timing, just most of the time, and I was. I was making money BIG time. Now I have to be happy and shut up while I get meager returns.

    • Charles says:

      You know fuill well that the change to a 2 per month interfund transfer was necessitated becasue the day-traders amongst our TSP participants were unnecessarily driving up costs for everyone else.

      • Deputydoright says:

        I never saw data that supported this argument. I think I never saw it because it does not exist. I would suggest that the alleged day-trading was minimal at best. I personally never made more than 2-3 trades a month. But it sure is a wrecking ball in my investment strategy to be locked into a fund with no way out, just because you want to save a few pennies.

  14. LL says:

    Who would police this fund the democrats…. HAHAHAHAHAH Why don’t you get back to work and start figuring out a way to NOT continually waste my tax dollars!

  15. Doug Carr says:

    All they really want is people to invest in companies that contribute to democrats. Pure and simple!! Another way to raise money behind the scenes.

    • Fed_Peasant says:

      A very good point!

    • MikeM says:

      I agree. Just like Obama threw away all the money loaning all those GREEN companies that went out of business. Besides they would probably tack on a bill that says they are allow to use money in the TSP fund to increase they spending on pet projects and have it end up like SOCSEC with many IOU that will never be paid back.

  16. B-KOS says:

    Not sure what all the fuss is about. This is not a new concept. Here is a Vanguard fund description.
    “Some individuals choose investments based on social and personal beliefs. For
    this type of investor, we have offered Vanguard FTSE Social Index Fund since
    2000. This low-cost fund seeks to track a benchmark of large- and
    mid-capitalization stocks that have been screened for certain social, human
    rights, and environmental criteria. In addition to stock market volatility, one
    of the fund’s other key risks is that this socially conscious approach may
    produce returns that diverge from those of the broad market.”

    • contspec says:

      This fund was created in 5/31/2000 and the returns are as follows:

      1 year: 33.06%
      3 year: 17.16%
      5 year: 16.11%
      10 year: 5.80%
      Since inception: 1.95%

      Not very good returns in the long haul. Compare to Vanguard’s REIT Index (5/13/1996)

      1 year: 11.23%
      3 year: 12.05%
      5 year: 15.46%
      10 year: 9.81%
      Since inception10.67%

    • steve5656546346 says:

      The fuss is about THE GOVERNMENT (i.e., politicians) determining what is “socially responsible.”

      Yes, there is the Vanguard fund, and there are lots of others as well: each with its own views. We get to pick based upon our own values.

  17. danving queen says:

    Car manufacturers and alcohol peddlers are socially irresponsible, accounting for the highest numbers of preventable death. This legislation is a crock of BS. If consenting adult porn makes a profit, I want to invest in that, just like GMAC does. Nonsense like this will prevent me from voting for democrats.

    • Steve Neal says:

      Perhaps the ObamaCare wealth redistribution scam will help convince you and other former Dems to vote for someone who did not shove this law up our a$$es…

      • retired worker fed says:

        go w/o medical insurance like the uninsured. Purpose of obamacare is to get these people insured.

      • danving queen says:

        Do not assume my political affiliation is “former Dem”. My point was Democrats are sponsoring this legislation with which I vehemently disagree. I am so tired of people bringing ObamaCare into almost every single political conversation. John Roberts had an opportunity to overturn it with his swing vote and didn’t. Get over it already.

  18. guest says:

    This fund idea is dumb. How do you define “socially responsible”? A much better idea is to expand coverage to other markets, such as emerging markets stock and bond funds, foreign bond funds, foreign small cap, REITS, etc. The TSP should look at Vanguard as a good model.

  19. Soonershooter says:

    Complete garbage…more waste of already depleted funds just to make every, single possible employee happy. Somewhere deep in this legislative junk, these two morons (or their families) are going to make out (not like kissing, but financially).

  20. #RobotLivesMatter says:

    Since what is “socially responsible” is subjective and open to personal opinion, who gets to decide what goes into the fund? Do i get to decide what is “socially responsible” to me, or does someone else decide for me?
    This makes ZERO sense.

    • Soonershooter says:

      “Who gets to decide what goes into the fund?” Congress and/or Obama is my bet.

      “Does someone else decide for me?” ….Yes, you’re not capable of deciding what is best for you, only dot.gov can make such an important decision.

    • Stewie Griffith says:

      Socially responsible is a personal option that is why you should have the choice at least to see which companies are doing the right thing. This might frighten the Koch Brothers, and so many other companies treating the American workforce as slaves.

  21. Dave J says:

    How would they define social responsibility? A lot of companies may be socially responsible when it comes to the environment but routinely outsource US jobs to foreign countries because they can avoid EPA mandates and pay employees cheaper wages. This makes them look good on paper because their US operations are responsible but they are simply moving their operations to China and other countries so they can avoid EPA regulations. One person’s definition of what is socially responsible isn’t the same as the opinion of what is socially responsible to someone else. Some argue that companies shouldn’t share information with the NSA even though they are required to under law. Some think it is socially irresponsible for companies to outsource US jobs overseas for any reason.

  22. Dave J says:

    How about an option for a fund that is safe from the government diverting money from your retirement fund for other expenses such as when they are unable to raise the debt ceiling? Of course this money is backed by the full faith and credit of the United States but if they are far enough in debt you may never have this money returned to your G-Fund.

  23. Rick says:

    Would this be a real fund, or would it be like the box greens in Oregon check on the power bill thinking that they can get electricity the is “100% renewable generated” from the grid?

  24. ifonlyicouldretire says:

    its merely an option and i for one like it. its not like they’d be forcing anyone to do it, just giving yet another investment OPTION not mandate. I for one would like to support environmentally conscience companies versus those that are helping to destroy the planet we live on. All you people lambasting this as another “liberal” ploy or somesuch need to get your head out of the sand and pay attention to the devastation that is the oil and gas industry. Ignore it at the peril of your children and grandchildren when the aquifers are poisoned.

    • Timberbeast says:

      I for one dont think we are or could ever destroy the earth. It is all a bunch of crap. Yes, I want clean water and air but these companies are not destroying it. And just how do you get to work? walk? and do you not use electricity, heat and cool your home. I venture to say if you really do hate the oil and gas crowd as much as you indicate it would change the first frozen winter or sweltering summer you toil throw. I am tired of this country taking on the persona of our elected morons, importing oil at inflated prices while this country is floating on huge reserves of oil and gas. I love profits, I want American companies to make them, employ American workers, and invest in American Companies. A healthy economy is good for Federal Employees, the coffers are fuller and we dont have the spectors of furlough, RIF and other adverse actions looking at us every three months. I want responsible leaders who are responsible with the peoples trust and treasure. The bums up there now are not, get rid of them.

      • ifonlyicouldretire says:

        i’ve lived in many a state with very high highs and very low lows over the years and have gradually moved to a rather stable climate to avoid those. I also have solar panels on my home but i cannot escape the oil companies because i have to put gas in my motorcycle which at least gets 70mpg instead of a car but i sure as heck wouldn’t want to be those poor souls living near fracking. Just wait and see the devastating effects of that one. Educate yourself and watch gasland part ii. Those of you who don’t agree with me – great, what do I care of your opinion?! Just as you don’t care about mine – but we are all entitled to our own and i have no problem with another option that is only that – another option. Just like the lifecycle options – i dont participate in them specifically but there’s nothing wrong with having them. Personally I think those who cant understand the cumulative effects of everything man is doing to the planet are sorry fools who can’t see the forest for the trees. But i digress.

        • Hopeisnot_A_Plan says:

          The movie Gasland was proven to be a total lie. The scenes were staged, etc. It should have been labeled as fiction.

        • Hopeisnot_A_Plan says:

          Even the Daily Kos, a very liberal publication called your Gasland II “erroneous and misleading”. You were deceived and suckered. Cut and paste the URL below into your browser if you want to learn something.

          http://www.dailykos.com/story/

    • konc2 says:

      I assume you don’t have any cars, lawn mowers, nor heat your home with gas or electricity since it is produced by fossil fuel.

    • AvJoe says:

      Ask TSP participants what additional options they prefer. They don’t want this one. BTW, thanks for explaining what is best for our kids and grandkids.

    • ObservingTheProcess says:

      Quit getting yoour information from the Hollywood Industry. Actually look into the facts. Oil & gas is pulled up from over 2 miles under the Earth’s surface. Drinking water is pulled from less than 500 feet below the service. There are several layers of solid rock between the oil and the water. It is impossible to contaminate the drinking water from 2 miles below the surface. I know, been there, done that, and live with it every day.

    • sinead9191 says:

      Some of the peril to our children and grandchildren revolves around the enormous debt these so-called socially conscientious meddlers in Congress keep increasing! Whatever savings we can earn is OURS — not idiots who have no concept of tightening their belts! You disdain the oil and gas industry, so I guess it would be okay with you if these morons select “alternative energy” companies such as Solyndra to invest OUR savings! Haven’t you figured out that all they really want is access to OUR money? Get a clue! Brilliant!

  25. Keeg says:

    This is a non-starter thought up by two useless members of our in-bred elected royalty.

    Tell you what fellas, clean up your houses first before thinking about messing with the TSP system.

  26. Lee_Lucas says:

    These politicians need to stay the hell out of retiree investments and the choices one makes regarding investment strategies. It is a slippery road when these elected officials begin taking stock of where we decide to put OUR money!

    • LaborAttorney says:

      These politicians created the TSP.

      • Lee_Lucas says:

        Politicians who were elected officials passed legislation authorizing the Federal Retirement Thift Board to manage a Thift Savings Plan. That does not give “politicians” license to now infiltrate the thrift board or the management of the assets in said TSP for the benefit of account holders.
        Your sentence that politicans created the TSP is a flaccid statement.

      • Rambo1957 says:

        These two?

  27. Fed_Peasant says:

    No REITS, precious metals, foreign bonds, emerging markets, then NO to this!!

  28. Workingfed says:

    Isn’t the G fund used routinely as an extraordinary measure to keep the whole country from defaulting? I’d say that is socially responsible.

  29. Workingfed says:

    You mean the G fund isn’t socially responsible?

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