Last month, you may remember the Trump Administration successfully putting a halt to a plan to invest billions in Thrift Savings Plan International Fund dollars in a new index fund that includes some Chinese state-owned military and intelligence companies.
While plenty of people applauded the Federal Retirement Thrift Investment Board’s subsequent decision to “delay” the controversial investment pending further study, others quickly countered that the Trump Administration had no business meddling in TSP affairs. Now, a democratic lawmaker is questioning the administration’s right to intercede.
Rep. Gerry Connolly (D-VA), who chairs the House Oversight and Reform Subcommittee on Government Operations, blasted the Trump Administration and the Department of Labor over its “unprecedented interference” in the TSP’s operations in a letter sent May 28 to DOL Secretary Eugene Scalia.
“This Administration has overstepped its authority and politicized a well-established, independent board whose sole mission is to help public servants maximize their retirement savings,” Connolly wrote in the letter. “With all due respect, please keep President Trump away from the retirement plans of federal employees and servicemembers. He has done enough damage already.”
FRTIB’s May 13 announcement that it would “delay” the implementation of the I Fund benchmark change to the Morgan Stanley Capital International All Country World Ex-U.S. Investable Market Index from the MSCI EAFE index “pending further study” came just two days after the Administration’s full-court press.
National Security Adviser Robert O’Brien and National Economic Council Chair Larry Kudlow wrote to Scalia May 11 stating that the White House does not want the Thrift Savings Plan to have money invested in Chinese companies. That same day Scalia wrote to Michael Kennedy, the chairman of the FRTIB, sharing the Kudlow/O’Brien letter noting the two have “grave concerns with the planned investment on grounds of both investment risk and national security.”
Trump also nominated three members to replace the majority of the five-member FRTIB, whose four-year terms had all expired.
“It is clear that FRTIB’s announcement to defer its 2017 decision was made under mounting and inappropriate political pressure from DOL and this Administration,” Connolly’s letter continues. “In implementing this unprincipled and unprecedented policy, it appears that DOL and the Trump Administration may have violated the bipartisan Federal Employees’ Retirement System Act of 1986, signed into law by President Reagan. The law established the FRTIB as the only independent entity that has legal authority to administer and manage the TSP, the retirement savings and investment plan for federal employees and members of the uniformed services.”
The letter concludes, “Under your leadership, DOL has overstepped and misused its authority. The Subcommittee requests all documents relating to your recent actions with respect to the TSP’s I Fund by June 5, 2020.”
Per an article in Government Executive, a Labor Department spokesperson defended the Administration’s actions.
“The Federal Retirement Thrift Investment Board acted unanimously and appropriately in indefinitely deferring the Thrift Savings Plan’s investments in risky Chinese companies in accordance with President Trump’s directive and the serious concerns expressed by the national security advisor, assistant to the president for economic policy, and the secretary of Labor,” the spokesperson said in the article. “Rep. Connolly remains free to invest in any companies of his choosing.”
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