A House bill lands as a veterans group steps up efforts to lobby the military and the White House against investment in Chinese defense firms.
On April 24, Rep. Michael Waltz (R-Fla.) introduced legislation that would bolster ongoing efforts to bar the Thrift Savings Plan from investing in foreign index funds that included companies with ties to the Chinese government.
The Taxpayers and Savers Protection Act would specifically prevent the Federal Retirement Investment Thrift Board from investing funds in foreign markets that the Public Company Accounting Oversight Board had not inspected or was forbidden from investigating due to conflict with another country's jurisdiction.
Though the bill's text did not mention specific countries, Rep. Waltz worried that the TSP I-Fund would inadvertently fund foreign firms with ties to countries that were hostile to the U.S.
"Currently, the I-Fund doesn't include developing economies but last year, the FRTIB board approved a change to this fund – scheduled to go into effect later this year – to adopt the All Countries Index, which includes adversaries like China and Russia," Rep. Waltz said in a statement announcing his bill.
In November, the Board had affirmed a decision it had made two years previously to shift its International Funds index to the MSCI All Country World Ex-US Investable Market Index. The move drew criticism from Senators such as Marco Rubio (R-Fla.), Jeanne Shaheen (D-N.H.) and Mitt Romney (R-Utah) and led to the introduction of the Thrift Savings Act in the Senate.
Earlier this months, a group of military and intelligence veterans led by Marine Gen. James L. Jones (Ret.) and Vice Admiral John M. Poindexter (Ret.), both former National Security Advisors, wrote to the Joint Chiefs of Staff warning that adding Chinese shares to the I-Fund would both inadvertently underwrite China's military industries. The letter was arranged and promoted by a group called Committee on Present Danger: China, which is urging U.S. financial firms as well as U.S. government pension funds to divest from companies linked to China's military. An open letter with different signatories from the group was directed at President Trump on April 25.
TSP loans, hardship withdrawals on the decline despite financial panic
Separately, at its monthly board meeting, FRTIB reported an decrease in loans and hardship withdrawals by TSP plan participants covering the period from January to mid-April. Loan activity did tick up slightly from February to March, but hardship withdrawals remained down during that period.
Financial market plunges led to an overall $45 billion reduction in FTRIB's funds under management from reporting dates in February to March – about a 7% dip.
Plan participation remains at an all-time high among federal employees and members of the uniformed services. As the agency responded to COVID-19, it was able to extend telework to 600 contractors while keeping "volunteer skeleton crews" working at agency sites to maintain continuity of operations.
Correction: Due to an editing error, this article originally miscast data from the TSP's recent report. This article was corrected on April 28 to reflect the decline in hardship withdrawals and loans from TSP accounts.