Sen. Rubio questions Thrift Savings Plan's exposure to Chinese companies

Republican Sen. Marco Rubio, R-Fla., is seeking answers from the Federal Retirement Thrift Investment Board, Washington, over its new mutual fund window's exposure to Chinese companies.

"It is unacceptable that American service-members' and other public servants' retirement savings would end up financing Chinese companies guilty of human rights abuses, or ones that the federal government has explicitly identified as national security threats," Mr. Rubio said in an Aug. 4 letter to Thrift board Chairman Michael F. Gerber.

The $706.9 billion Thrift Savings Plan, the retirement plan for 6.6 million federal employees and members of the uniformed services, opened a mutual fund window June 1, which gives eligible TSP participants access to more than 5,000 mutual funds, including some with exposure to Chinese companies, Mr. Rubio said.

For participants who choose to invest through the mutual fund window, the initial investment must be at least $10,000, and participants may not invest more than 25% of their total account in the mutual fund window, according to information on the TSP website. The fees associated with the mutual fund window include a $55 annual fee to cover administrative costs, a $95 annual maintenance fee and a $28.75 per-trade fee.

Mr. Rubio in his letter posed four questions to Mr. Gerber:

• What actions is the FRTIB taking to remove funds that include Chinese companies blacklisted by the federal government or that are alleged to engage in Uyghur forced labor?
• Given the confirmation of these companies' inclusion, what actions is the FRTIB taking to search for blacklisted companies listed among other funds and expeditiously remove them?
• Will the FRTIB commit to building out more options for TSP account holders looking to invest in emerging markets funds that exclude China- and Hong Kong-based companies?
• Will the FRTIB reconsider, reverse or amend its mutual fund window initiative in response to the clear risks associated with it?

"Beyond the blacklisted entities, companies based in China or Hong Kong do not provide U.S. securities regulators access to independent audits," Mr. Rubio said. "The lack of transparency and compliance with U.S. law significantly increases risks for American investors. It is not an exaggeration to say that the FRTIB appears to be failing in its fiduciary duty to our servicemembers and federal employees."

Kim Weaver, the Thrift board's director of external affairs, said in an email that the board has received Mr. Rubio's letter and will respond.

Mr. Rubio has long focused on the TSP and China. Earlier this year, he held up the nominations of four current board members, including Mr. Gerber, until after they said they have no plans to invest TSP assets in Chinese companies.