Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. WASHINGTON
May 12, 2020 03:01 PM

Trump directs Federal Thrift board to halt TSP China investment

Brian Croce
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images

    The Trump administration directed the Federal Retirement Thrift Investment Board, Washington, to halt plans to shift billions of dollars in retirement assets to an index fund that includes Chinese companies.

    At issue is a 2017 board decision to shift the $557.3 billion Thrift Savings Plan'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.

    After calls from Capitol Hill to reverse course, the board in November decided to move forward and plans to make the shift in the second half of 2020.

    But pressure on the board, which oversees the TSP, the retirement system for 5.9 million federal employees and members of the uniformed services, has persisted in recent months and have come to a head in light of the COVID-19 pandemic.

    Two letters were sent Monday — one from Larry Kudlow, director of the national economic council, and national security adviser Robert O'Brien to Labor Secretary Eugene Scalia and another from Mr. Scalia to Michael D. Kennedy, chairman of the FRTIB, regarding the I Fund shift.

    Mr. Kudlow and Mr. O'Brien wrote that the FRTIB is set to implement the shift "during a time of mounting uncertainty concerning China's relations with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese Government with respect to the global spread of the COVID-19 pandemic. In view of these considerations, we don't believe that proceeding with the investment of the retirement savings of hardworking federal workers in Chinese companies is prudent."

    See more of P&I's coverage of the coronavirus

    Mr. Scalia referenced that point and the "national security and humanitarian concerns for the Unities States" in his letter to Mr. Kennedy. "At the direction of President Trump, the board is to immediately halt all steps associated with" the I Fund shift, and "to reverse its decision to invest plan assets on the basis" of the MSCI ACWI ex-U.S. IMI index, Mr. Scalia said.

    The Department of Labor "has broad investigative and audit authority over the activities of the TSP board of directors and other plan fiduciaries who make investments and operate the plan," a Labor Department spokesman said in an email, which is why Mr. Scalia received a letter from the president's principal economic and national security advisers and why he wrote to Mr. Kennedy.

    In his letter, Mr. Scalia added that the board should defer its decision until recently nominated board members are confirmed by the Senate. On May 4, Mr. Trump nominated three people to the five-member board that could lead to a new majority.

    Deferring the I Fund shift will "enable a newly constituted board, impaneled with the advice and consent of the Senate, to decide what index — if any — should be selected to replace the current I Fund index," Mr. Scalia said.

    A source familiar with the matter said it was their understanding that the administration has the authority to stop the I Fund shift from taking place.

    A board spokeswoman declined comment Tuesday. In reaffirming its decision in November, board members and members of the Employee Thrift Advisory Council, which provides advice to the FRTIB, said they have to make decisions based on what's best for their participants and that's what the I Fund shift represents.

    Mr. Scalia asked Mr. Kennedy — who is one of three board members that will be replaced if Mr. Trump's nominees are approved — to confirm by "close of business Wednesday" that the board will halt the I Fund shift.

    On Tuesday, the board posted a notice that it will hold a meeting Wednesday morning on "investment policy review."

    Related Articles
    Federal Retirement Thrift presses on with TSP China investment
    3 Federal Thrift board nominees could form new majority
    Group petitions lawmakers to stop TSP's China investment
    Letter to Eugene Scalia
    Scalia letter >
    Letter to Michael Kennedy
    Kennedy letter >
    Recommended for You
    Congress Aerial-main_i.jpg
    Senate Finance Committee unanimously OKs EARN legislation
    ONLINE_180419809_AR_0_AGWDSLGSIJDR.jpg
    Senate confirms 2 SEC commissioners
    Congress Aerial-main_i.jpg
    Senate confirms 4 nominees to Federal Thrift board
    New SEC Rule on Fair Pricing Determination Needs Careful Consideration
    Sponsored Content: New SEC Rule on Fair Pricing Determination Needs Careful Consideration

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit