President Donald Trump on Monday nominated three people to the five-member Federal Retirement Thrift Investment Board, Washington, in a move that could reignite debate around a decision to shift billions of dollars in retirement assets to an index fund that includes Chinese companies.
John M. Barger, Christopher Bancroft Burnham and Frank Dunlevy were each nominated to fill seats held by board members whose terms have expired.
If confirmed by the Senate, Mr. Dunlevy, vice president of investment funds and counselor to the CEO of U.S. International Development Finance Corp., would replace Michael D. Kennedy, the board chairman, for a term expiring in September 2022; Mr. Barger, managing director of NorthernCross Partners, an investment advisory firm, would replace David A. Jones for a term expiring in October 2022; and Mr. Burnham, chairman and CEO of Cambridge Global Capital, a private venture capital firm, would replace Ronald McCray for a term expiring in September 2024.
FRTIB board members can serve past the end of their terms until a replacement is confirmed.
The three nominees could form a new majority on the board, which oversees the $557.3 billion Thrift Savings Plan, the retirement system for 5.9 million federal employees and members of the uniformed services.
In 2017, the board decided to shift TSP's I Fund benchmark to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index. The new index was made up of about 8% Chinese companies, as of Sept. 30, according to an Aon Hewitt Investment Consulting study presented to the board in October. Aon recommended the board switch to the MSCI ACWI ex-U.S. IMI index in 2017 and reiterated that recommendation last fall.
As of Dec. 31, 2018, TSP's I Fund had $40.7 billion in assets.
Lawmakers on Capitol Hill, led by Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., have urged the board to reconsider the I Fund shift. Mr. Rubio said in a statement April 30 that it's "outrageous that five unelected bureaucrats appointed by the previous administration have ignored bipartisan calls from Congress to reverse this shortsighted decision."
He added, "America's investors should never be a source of wealth funding the Chinese Communist Party'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."
After calls from Capitol Hill to reverse course, the board in November decided to move forward. It is planning to make the I Fund shift in the second half of 2020, said Kim Weaver, the board's director of external affairs, in an email.
"It is the president's responsibility to appoint FRTIB board members," Ms. Weaver said. "We look forward to working with the nominees."
