Congressman Gerry Connolly (D-VA) sent a strongly worded letter to Labor Department Secretary Eugene Scalia saying the agency “has overstepped and misused its authority” with respect to its recent efforts to get the Federal Retirement Thrift Investment Board (FRTIB) to hold off on changing the I Fund to a new benchmark index.
The letter was sent on behalf of the House Committee on Oversight and Government Reform; Connolly is chairman of the Subcommittee on Government Operations.
He also went after the Trump administration in the letter, saying that DOL and the administration “may have violated the bipartisan Federal Employees’ Retirement System Act of 1986, signed into law by President Reagan.”
“With all due respect, please keep President Trump away from the retirement plans of federal employees and servicemembers. He has done enough damage already,” wrote Connolly.
The letter goes on to ask for “all documents relating to your [Labor Department’s] recent actions with respect to the TSP’s I Fund by June 5, 2020.”
A spokesperson for DOL defended the agency’s actions in a statement in response to Connolly’s letter:
The Federal Retirement Thrift Investment Board acted unanimously and appropriately in indefinitely deferring the Thrift Savings Plan’s investments in risky Chinese companies in accordance with President Trump’s directive and the serious concerns expressed by the National Security Adviser, Assistant to the President for Economic Policy, and the Secretary of Labor. Representative Connolly remains free to invest in any companies of his choosing.
Political Controversy Over the TSP’s I Fund
All of this political handwringing stems from a change the FRTIB planned to make to the I Fund.
The FRTIB announced it would be changing the underlying benchmark index tracked by the I Fund to a new one that includes Chinese companies. The agency worked with a consulting firm to study the change and said that the I Fund potentially would post better returns by using the new index. The FRTIB also said that the change would be in line with what other large private sector defined contribution plans currently do with respect to having exposure to Chinese companies.
“TSP funds are solely the property of plan participants—it is not federal money and it is not taxpayer money. Choices on how to invest in the TSP funds belong solely to the participants. The FRTIB is required by Congress to make decisions that are in the best interest of all TSP participants, and not consider issues better left to other federal entities,” wrote FRTIB members Michael Kennedy and Clifford Dailing in an editorial defending their decision.
Lawmakers began lining up to fight the decision as early as last May, however, and it only grew from there. Eventually, the White House got involved last month when President Trump found out about the pending change to the I Fund and the political battle erupted.
No doubt fueling the situation was the fact that several members on the FRTIB have expired terms and were appointed by President Obama. President Trump appointed new members to replace current FRTIB board members Michael Kennedy, David Avren Jones and Ronald David McCray.
Once that happened, the FRTIB announced it was putting its decision on hold, but the political battle still rages on as Connolly’s letter demonstrates.