Two Senators recently sent a letter to the comptroller general of the Government Accountability Office wanting to know what the Thrift Savings Plan is doing to address the effects of climate change on federal employees’ retirement savings.
The letter was sent by Senators Jeff Merkley (D-OR) and Maggie Hassan (D-NH). In the letter, they write, “…over the past ten years, the traditional energy sector’s performance has become increasingly poor, reducing the energy sector’s share in global market capitalization. From 2007 to 2014, the energy earnings per share (EPS) contribution to the S&P 500 have dropped approximately 50%, and investors are losing money as a result.”
They also note that some targeted retirement plans have begun to take action to address climate risks. Consequently, they believe the TSP should as well and by ignoring the issue, it is placing “assets and retirement security of its participants in jeopardy.”
The Senators go on to ask GAO to study these questions:
- What is known about the exposure of TSP’s investment portfolio to risks from climate change?
- What steps, if any, have TSP and the Federal Retirement Thrift Investment Board taken to address risks from climate change?
- What have defined contribution plans in other nations with investment options similar to TSP (such as those in the U.K. and Hong Kong) done to address investment risks from climate change? What have they done to communicate this information to participants?
- How have TSP’s fossil fuel holdings performed over the past decade? How would TSP’s overall financial performance [have] differed without fossil fuels?
Past Efforts to Change the TSP
This is not Merkley’s first foray into altering the holdings within the TSP to combat climate change, something he says is a cause for concern for TSP participants.
Last year, Merkley introduced a bill that would have given federal employees a new investment option within the TSP that does not support the fossil fuel industry. He said at the time:
As climate chaos ramps up, all Americans deserve the option to divest from the fossil fuel industry. For the first time, this bill will give millions of federal employees the power to ensure their retirement funds are invested in a more sustainable, socially responsible investment portfolio.
Despite that bill’s failure to advance, Merkley has not given up on the idea of using the TSP to combat climate change as the letter sent to GAO indicates.
Efforts to change the investment options within the TSP for political reasons go back many years as the pot of money inside of the TSP grows ever larger as federal employees use it to build their financial futures. Such a large pool of money no doubt creates temptation for lawmakers looking to tap into it for various political causes. To date, none have resulted in any changes to the TSP, but that doesn’t mean they haven’t been proposed or attempted.
These efforts raise an interesting question – should Congress become involved in dictating the investments within the TSP? Federal employees and retirees had a lot to say about the issue based on the many comments on our last article about Merkley’s bill. Feel free to address the subject in the comments below.