A bipartisan bill that would prevent the Federal Retirement Thrift Investment Board, Washington, from directing retirement savings to Chinese stocks was introduced Wednesday in the Senate.
The Taxpayers and Savers Protection Act would conditionally ban the investment of Thrift Savings Plan funds in securities listed on mainland Chinese exchanges, according to a news release. In particular, it would prohibit investment in issuers listed on foreign securities exchanges where the U.S. Public Company Accounting and Oversight Board has not issued an audit inspection and where the PCAOB is prevented from conducting such inspections.
The FRTIB, which administers the $599.5 billion TSP, the retirement plan for 5.6 million federal employees and members of the uniformed services, decided in November 2017 — upon the recommendation of Aon Hewitt Investment Consulting — to shift the Thrift Savings Plan's I Fund benchmark to the MSCI ACWI ex-U.S. Investable Market index from the MSCI EAFE index.
As of Dec. 31, TSP's I Fund had $40.7 billion in assets.
A bipartisan group of senators led by Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., have taken issue with the decision and urged the board to reconsider.
Also co-sponsoring the bill Wednesday were Sens. Mitt Romney, R-Utah; Kirsten Gillibrand, D-N.Y.; Josh Hawley, R-Mo.; Rick Scott, R-Fla.; and Mike Braun, R-Ind.
The change in investment strategy is set for implementation next year. About 8% of the MSCI ACWI ex-U.S. IMI is made up of Chinese companies, as of Sept. 30, according to an Aon study presented to the FRTIB on Oct. 28 that recommended the board move forward with the change.
"If the Federal Retirement Thrift Investment Board is going to drag its feet on reversing the decision that would allow this dangerous policy to go into effect, then Congress must act," Ms. Shaheen said in the news release. "This isn't complicated — investments of our federal workers and armed forces should not fund companies that could help the Chinese government carry out nefarious attacks, from spying on U.S. citizens to committing gross human rights abuses."
Rep. Mark Meadows, R-N.C., will be introducing a companion bill in the House, according to the news release.
"Today makes clear that a bipartisan, bicameral coalition in Congress will not sit on the sidelines and allow the TSP board to funnel the federal retirement savings of U.S. service members and federal employees to the Chinese Communist Party," Mr. Rubio said in the news release.
Kim Weaver, the board's director of external affairs, said in an email that the board is reviewing the bill and does not have a comment at this time.
Following the senators' Oct. 22 letter urging the board to reconsider, Ms. Weaver said it will make a decision on the I Fund benchmark at a "future meeting." The board's next meeting is Nov. 13.
An Aon spokeswoman declined to comment.