A bill that would forbid the Federal Retirement Thrift Investment Board, Washington, from investing Thrift Savings Plan assets in Chinese companies has been introduced in the Senate.
Sen. Tommy Tuberville, R-Ala., introduced the Prohibiting TSP Investment in China Act on Tuesday. The bill would prevent "the TSP Fund from investing in any security of a Chinese company," according to a news release from Mr. Tuberville. Text of the bill was not yet posted on Congress' website.
"Not a single taxpayer dollar should be invested with these entities that have a clear history of corruption," Mr. Tuberville said in the news release. "Such investments put the investors, and our country, at risk. It is time to take a serious, united and bipartisan approach to disentangle American financial investment with China and send the message that American capital will not support Chinese aggression."
The Thrift board administers the $735 billion Thrift Savings Plan, the retirement system for 6.3 million federal employees and members of the uniformed services.
Investing TSP assets in Chinese companies developed into a major controversy in 2019 and early 2020.
In 2017, the board decided to shift the 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, according to an Aon Hewitt Investment Consulting study presented to the board in October 2019. Aon recommended the board switch to the MSCI ACWI ex-U.S. IMI index in 2017 and reiterated that recommendation in 2019.
Then, while facing calls from Capitol Hill to reverse its decision, the board in November 2019 decided to move forward.
But in May 2020, Trump administration officials sent a letter to then-FRTIB Chairman Michael D. Kennedy urging the board to stop the I Fund index shift. The same week, President Donald Trump nominated three people to the five-member board that, upon Senate confirmation, could have led to a new majority. At a subsequent meeting in May 2020, the board decided to pause the implementation and let the new board members make the final decision.
However, those Trump nominees were never confirmed by the Senate, and President Joe Biden pulled their nominations in February. Mr. Biden has yet to put forth his own nominees.
At the November 2019 meeting during which the FRTIB affirmed the I Fund index shift, Megan G. Grumbine, the board's general counsel and secretary, highlighted portions of the 1986 legislation that created the TSP that she said shows TSP accounts are private, not federal, property. "The employee owns it, and it cannot be tampered with by any entity including Congress," Ms. Grumbine said at the time, reading the legislation.
An FRTIB spokeswoman could not immediately be reached for comment.