A group of Senate Democrats is calling on the Federal Retirement Thrift Investment Board, Washington, to provide federal workers with additional options to invest in funds run by diverse asset managers.
The request comes ahead of the board's plans to offer Thrift Savings Plan participants access to a mutual fund window in the summer of 2022. The mutual fund window opens at the same time as the board's new record-keeper contract — awarded in November 2020 — with Accenture Federal Services goes live.
"As part of this initiative, (we) urge you to create opportunities for federal workers to invest in funds run by racially, ethnically and gender diverse asset managers," the Senate Democrats — Robert Menendez and Cory Booker of New Jersey, Alex Padilla of California, Ben Ray Lujan of New Mexico, Sherrod Brown of Ohio, Jeff Merkley of Oregon, and Tim Kaine of Virginia — said in their Oct. 21 letter to David A. Jones, the board's acting chairman. "When it comes to their retirement investments, federal workers deserve the chance to make the strategic and values-driven choice to prioritize diversity."
Executive diversity is a good business practice that has been shown to improve returns, the senators said in their letter, pointing to a 2020 study by McKinsey that found companies in the top quartile for racial, ethnic and gender diversity were more likely to have returns above their industries' national medians.
"If the board offers TSP funds specifically managed by diverse asset managers, more federal workers may elect to participate in the TSP or to increase their contributions," the senators said. "By being responsive to consumer interest in diversity, the board could improve TSP participation and retirement security among values-driven federal workers."
The Thrift board administers the $774.2 billion Thrift Savings Plan, the retirement system for 6.4 million federal employees and members of the uniformed services.
When the mutual fund window goes live, participants will have access to more than 5,000 mutual funds, Kim Weaver, board director of external affairs, said in an email Thursday.
"The mutual fund window will give participants the option to take a portion of their TSP account and invest in a wide variety of investment choices that will allow them to customize their retirement portfolio," Ms. Weaver said. "To the extent participants wish to incorporate a particular investment outlook into their portfolio, they will have the means to do so through the mutual fund window."
Added Ms. Weaver, "We look forward to responding to the senators and providing them with information about the progress toward implementing the mutual fund window."