ETAC Urges Senators to Drop Campaign Against I Fund Change

View this article online at https://www.fedsmith.com/2019/11/27/etac-urges-senators-drop-campaign-against-i-fund-change/ and visit FedSmith.com to sign up for free news updates
By on November 27, 2019 in Pay & Benefits with 0 Comments
Map of China and surrounding countries

The chairman of the Employee Thrift Advisory Council (ETAC) recently sent a letter to a group of Senators urging them to stop fighting the recent change made to the underlying investment index tracked by the TSP’s I Fund.

“Based on both FRTIB’s and investment consultant Aon’s expert guidance, it would be fiscally irresponsible to divest from a fund that has consistently outpaced developed markets over the past 15 years. Instituting an investment mandate at odds with the private sector would wrongfully and unnecessarily disadvantage federal employees and veterans of the armed services,” wrote ETAC chairman Clifford Dailing.

He added in the letter that blocking the opportunity to invest in emerging markets within the TSP would put federal employees at a disadvantage relative to private sector workers and ultimately make it harder for the federal government to recruit and retain employees.

Politics and the TSP

The Thrift Savings Plan is no stranger to getting wrapped up in political drama, and this latest situation with the I Fund is no exception.

Senator Marco Rubio (R-FL) has been leading a charge against the Federal Retirement Thrift Investment Board’s decision to change the I Fund to a new benchmark index. Rubio believes that because the new index includes Chinese companies, it will be bad for the United States and ultimately harm federal employees who might have money in the I Fund.

“America’s investors should never be a source of wealth funding Beijing’s rise at the expense of our nation’s future prosperity, and the TSP Board should not force U.S. service members and federal employees to unwittingly undermine the American national security interests that they work hard every day to protect,” said Rubio.

The FRTIB, however, notes that the change is in line with what other large companies and federal contractors do with their 401(k) plans, plus the new index stands to generate better returns for federal employees who have holdings in the I Fund.

It’s a political issue for the Senators, but the FRTIB says it’s doing its fiduciary duty to federal employees and retirees.

FRTIB chairman Michael Kennedy and ETAC chairman Clifford D. Dailing recently wrote in an op-ed that the change to the I Fund will be beneficial for federal employees and that the political concerns coming from Congress are unfounded.

At this point, it appears Rubio’s bill would have to pass and be signed into law in order to stop the change from going forward since the FRTIB seems to be steadfast in its decision. It will be interesting to see how the latest political battle over the TSP plays out.

A copy of Dailing’s letter is included below.

ETAC Letter to Senators 11-20-19

Want to see more articles like this one? Sign up for FedSmith's free email lists!

© 2019 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

Tags:

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

Top