Last week, Senator Tommy Tuberville (R-AL) introduced a bill that would prohibit Thrift Savings Plan (TSP) funds from being invested in any entity based in the People’s Republic of China (PRC).
If this bill (the Prohibiting TSP Investment in China Act S. 1665) is passed, it would prevent the TSP Fund from investing in any security of a Chinese company. This motion is theorized to be an attempt at keeping China in line, by sending “a message of zero tolerance towards Chinese aggression and financial manipulation.”
A press release from Tuberville stated: “Companies headquartered in the People’s Republic of China have repeatedly committed corporate espionage, violated sanctions imposed by the United States, flouted international property laws, committed theft, and failed to comply with basic audit and regulatory standards. Investing the retirement savings of our nation’s warfighters and Federal civilian employees in Chinese companies threatens the economic stability of American investors and undermines U.S. national security interests. Such investments would funnel capital to companies that commonly skirt U.S. sanction laws. Hard-earned American dollars should not be invested in entities actively working to facilitate China’s military expansion and the persecution of religious minorities.”
“We’ve seen it time and again – Chinese companies don’t play by the rules, committing intellectual property theft and disregarding basic regulatory standards at the expense of investors,” Tuberville said. “Not a single taxpayer dollar should be invested with these entities that have a clear history of corruption. 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.”
There is old and new support behind this movement. Jim Banks (R-IN) recently introduced a companion bill in the House of Representatives.
Tuberville also noted that the Trump administration successfully blocked a planned change to the underlying index tracked by the TSP’s I Fund which would have resulted in greater Chinese investments, legislation action is needed by Congress “to provide a permanent solution, rather than relying on the whims of executive action.” These previous efforts during the Trump administration were halted when in May 2020, the governing body of the TSP, the Federal Retirement Thrift Investment Board, voted unanimously to postpone implementation of its decision to change the Thrift Savings Plan’s international (I) fund investments to include indexes that include Chinese companies.
Additionally, Senators Marco Rubio (R-FL) and Jeanne Shaheen (D-NH), have come forward in a letter to the Chairman of the board and said that the change would “expose nearly $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this MSCI index.”
Currently, the FRTIB maintains that its planned change to the I Fund to include more Chinese companies was in the interests of TSP participants and also that the action is in line with what other firms did with their 401k plans.
To stay updated on this developing legislation regarding the I Fund, and to receive weekly TSP Fund allocation advice from a certified and licensed professional, become a member at Federal Benefits Service today!
