Recently introduced legislation would prohibit the Thrift Savings Plan from putting any future investments into Russian companies.
The Terminating Securities from Putin (TSP) Act (H.R. 7113) was introduced by Congressman Ted Budd (R-North Carolina). It would bar the Federal Retirement Thrift Investment Board (FRTIB), the agency which oversees the TSP, from making any future changes to the TSP that would allow federal employees’ retirement funds to be invested in Russian companies.
Budd introduced the bill in response to Russia’s recent invasion of Ukraine. He said in a statement, “Members of our military and federal workforce should not have to wonder whether or not their retirement investments are coming from Vladimir Putin’s Russia. I’m proud to introduce legislation that draws a line in the sand and provides moral assurances to 6 million members of the military and the federal workforce.”
Does the TSP’s I Fund Currently Have Any Russian Investments?
Federal employees may be wondering if any of their TSP savings are currently invested in Russian companies. The answer is no.
The I Fund is the fund within the TSP which invests in international companies. It currently tracks the MSCI EAFE Index. As of the time of this writing, Russia is not listed among the countries tracked by that index. The MSCI website currently lists these countries as the allocated markets for the MSCI EAFE Index:
- United Kingdom
- Hong Kong
- New Zealand
But Could There Be Russian Investments?
So if the I Fund isn’t currently investing in Russian companies, why the legislation? Budd explained that it’s because of past events.
Several years ago, the FRTIB planned to change the underlying index of the I Fund from the MSCI EAFE Index to the MSCI All Country World ex-U.S. Investable Market (MSCI ACWI ex-US IMI) Index. This index would have included companies in Russia and China.
The FRTIB said at the time that the change was in line with what other large defined benefit plans currently offer and also had the potential to produce higher returns for TSP participants. Had that change gone through, it could have negatively impacted current investments in light of the recent Russian invasion of Ukraine.
A number of lawmakers were vehemently opposed to the change to the I Fund at the time. Eventually, the White House under the then Trump administration stepped in to stop the planned change. The FRTIB acquiesced and ultimately abandoned the effort. It was stated at the time that the change was delayed, so nothing says changing to the new index might not happen again in the future.
That is Budd’s impetus for introducing the legislation. He noted that there is nothing in law that prohibits the FRTIB from making the change again in the future, so the legislation would prohibit the FRTIB from establishing any funds within the TSP that would include an investment of an entity based in Russia as well as ensuring that no funds are invested in Russia, and if so properly divesting such funds.