A group of Senators are pressing the chairman of the Federal Retirement Thrift Investment Board (FRTIB), the agency that oversees the Thrift Savings Plan, to reverse its decision to switch the underlying index tracked by the TSP’s I Fund.
Senator Marco Rubio (R-FL) has been one of the Senators leading the charge against the change. Back in August, Rubio and Senator Jeanne Shaheen (D-NH) sent another letter to FRTIB Chairman Michael Kennedy asking him to undo the proposed change, saying it would expose the retirement savings of federal employees to “severe and undisclosed material risks associated with many of the Chinese companies listed on this MSCI index.”
Rubio and Shaheen have gotten four other Senators to join them in their quest to reverse this change and are not letting up, having sent Kennedy a second letter this week. They maintain that it will be exposing the retirement savings of federal employees to a corrupt government, writing that it will “assist in the Chinese government’s military activities, espionage, and human rights abuses.”
The Senators also maintain that the investments in the Chinese firms are too risky, stating, “…the basic financial hazards of investment in firms listed on Chinese exchanges are well documented. A recent accounting scandal involving one of China’s biggest accounting firms, Ruihua Certified Public Accountants, highlights the extent of the irregularities in the financial markets to which federal employees may soon be exposed.”
Politics and the TSP
The political interests of lawmakers creep into the TSP from time to time and, by extension, the retirement savings for federal workers. As the size of the holdings within the TSP continues to grow, it increasingly becomes a temptation for lawmakers to put to use for political reasons.
Another recent example that we have written about previously involved Senator Jeff Merkley’s (D-OR) ongoing quest to “improve” the TSP by adding a “fossil-fuel free [investment] option” to it. According to Merkley, not only would this new option help save the planet, it would provide better returns for federal employees who use the TSP to save for retirement.
FedSmith.com readers, however, disagreed with Merkley. In a survey we conducted in response to his proposed legislation, respondents overwhelmingly panned the idea.
Whether or not one thinks the various political interests that pop up periodically in Congress to “improve” the TSP are a good or bad thing, there is no denying that politicians cannot resist the temptation to use the TSP as a tool to push their political agendas. Expect more of it in the future.
Should the I Fund be changed to use the new benchmark index? Share your thoughts in the comments below.