Senators Still Fighting TSP I Fund Change

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By on November 22, 2019 in Pay & Benefits with 0 Comments
Senator Marco Rubio (R-FL)
Senator Marco Rubio (R-FL)

The two Senators that have been on a campaign to block the Federal Retirement Thrift Investment Board’s (FRTIB) decision to change the investment index used by the I Fund have not given up despite the FRTIB’s announcement that it has finalized its decision.

Senators Marco Rubio (R-FL) and Jeanne Shaheen (D-NH) sent a letter to Senators Ron Johnson (R-WI), chairman of the Senate Committee on Homeland Security and Governmental Affairs and Gary Peters (D-MI), ranking member on the same committee, urging them to “expediently consider” Rubio’s bill that would ban the investment of TSP funds in securities listed on mainland Chinese exchanges.

What’s the Beef?

The FRTIB made a decision to change the underlying investment index used by the Thrift Savings Plan’s I Fund from the MSCI EAFI Index to the MSCI All Country World ex-U.S. Investable Market (MSCI ACWI ex-US IMI) Index.

The Senators are upset about the change because they say it will leave federal employees vulnerable by allowing their retirement funds to be invested in Chinese companies since the new index includes more companies in China.

“While the FRTIB may not see itself as a policy making institution, Congress most certainly is. Taking up the TSP Act will allow lawmakers to protect federal employees from investing their hard-earned retirement savings in AVIC’s AviChina Industry & Technology, Hikvision, ZTE and other Chinese companies that are engaged in activities counter to American interests,” wrote the Senators.

A copy of the letter is included below.

Dear Chairman Johnson and Ranking Member Peters:

We respectfully request that the Senate Committee on Homeland Security and Government Affairs expediently consider and report S.2791, the Taxpayers and Savers Protection (TSP) Act, to ensure that the retirement savings of American federal employees and members of the armed services are not invested in China-based companies, including those involved in the Chinese government’s military activities, human rights abuses, and industrial policy.

On November 28, 2017, the Federal Retirement Thrift Investment Board (FRTIB) voted to change the index tracked by the sole international fund (I Fund) within the Thrift Savings Plan (TSP) to the MSCI All Country World ex-U.S. Investable Market Index (ACWI ex-US IMI). If implemented, this decision will expose the I Fund’s approximately $50 billion in federal retirement assets to the severe national security, human rights, and investor protection risks related to China’s capital markets. In a meeting on November 13, 2019, the Board indicated its intention to move forward with this ill-advised move.

While the FRTIB may not see itself as a policy making institution, Congress most certainly is. Taking up the TSP Act will allow lawmakers to protect federal employees from investing their hard-earned retirement savings in AVIC’s AviChina Industry & Technology, Hikvision, ZTE and other Chinese companies that are engaged in activities counter to American interests.

Thank you for your consideration. We look forward to assisting in any way to ensure that this important concern is addressed.

Sincerely,
Marco Rubio (R-FL)
Jeanne Shaheen (D-NH)

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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.

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