Another bill seeking to prevent assets managed by the Federal Retirement Thrift Investment Board, Washington, from being invested in Chinese companies was introduced Thursday in the Senate.
Sen. Marco Rubio, R-Fla., introduced the TSP Fiduciary Security Act, which would amend the board's fiduciary duty to include a requirement not to harm national security.
Under Mr. Rubio's bill, Thrift Savings Plan assets would be prevented from being invested in "Chinese military companies" and companies on the Department of Commerce Entity List. Moreover, proxy votes by the contractual managers of the TSP that would cause companies the TSP is invested in to harm national security assets would presumptively violate fiduciary duty, according to a news release.
The Thrift board administers the $757.8 billion Thrift Savings Plan, the retirement system for 6.3 million federal employees and members of the uniformed services.
Mr. Rubio has introduced several pieces of legislation aimed at preventing the Thrift board from directing retirement savings to Chinese stocks, including one last month that would conditionally ban the investment of TSP funds in securities listed on Chinese exchanges.
In November 2019 — after calls from Mr. Rubio and others on Capitol Hill to reverse course — the board reaffirmed a 2017 decision 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.
But in May 2020, the board decided to pause the implementation after President Donald Trump nominated three people to the five-member board. 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.
"It was incredibly shortsighted and dangerous for the Federal Retirement Thrift Investment Board to attempt to invest American civil servants' retirement savings in companies that are tools of the Chinese Communist Party," Mr. Rubio said in a news release. "But it was also revealing of a serious problem: The board and their friends on Wall Street will get away with using American servicemembers' own savings to fund threats to U.S. national security if the fiduciary duties binding these money managers only focus on short-term financial value."
Kim Weaver, the board's director of external affairs, declined to comment Friday.
At the board's May 26 meeting, she commented on two proposed amendments to a broader bill moving through the Senate that were aimed at preventing the board from directing TSP assets to Chinese stocks. "We have communicated our position that both amendments discriminate against our participants, in that neither prohibition would apply to any other 401(k) or IRA," Ms. Weaver said.
Those amendments were not considered when the bill came up for a vote.
