WASHINGTON — Despite bipartisan opposition from lawmakers in the House and Senate, the Federal Retirement Thrift Investment Board (FRTIB) yesterday proceeded to begin investing federal retirement savings from the Thrift Savings Plan (TSP) — the largest defined contribution plan in the world — in bad-actor Chinese companies. The FRTIB’s new Mutual Fund Window will add 5,000 unvetted mutual funds to the pool of TSP investment options. Shockingly, the FRTIB admitted publicly that it has not conducted any due diligence to evaluate whether these mutual funds include Chinese-owned entities that pose national security risks or fund Chinese companies engaged in human rights violations.
CPA applauded a letter led by Senator Marco Rubio (R-FL) to the FRTIB asking them to delay the Mutual Fund Window. Senators Rick Scott (R-FL), Josh Hawley (R-MO), Tom Cotton (R-AR), Roger Marshall (R-KS), and Rob Portman (R-OH) also signed the letter. Representative Greg Murphy (R-NC) and a bipartisan group of House lawmakers sent an identical letter to the FRTIB.
“[W]e again urge the Board to cancel, or, at minimum, postpone implementation of its Mutual Fund Window initiative until your Board can ensure that no TSP funds are invested in dangerous, non-compliant or opaque Chinese securities, as well as commit to providing TSP account-holders as much transparency as possible about where their hard-earned savings are being invested,” the lawmakers wrote.
“Congress and the Biden administration must intervene immediately to stop the unelected bureaucrats at the FRTIB from investing federal retirement savings in opaque Chinese firms engaged in human rights abuses and a wide range of military-related activities,” said CPA Chairman Zach Mottl. “It is absolutely unacceptable for the Chinese Communist Party to be profiting from the retirement accounts of U.S. government employees and members of the military. The fact that the FRTIB openly admits it has not vetted these 5,000 new mutual funds is an affront not just to TSP participants, but to every American.”
CPA and a diverse coalition of human rights and national security organizations recently launched NoTSPforCCP.org, a website calling on the FRTIB to abandon its unconscionable plan to invest billions of dollars from the retirement assets of federal government employees, active duty servicemembers, veterans, and retired civil servants in companies controlled by the Chinese Communist Party (CCP).
“The level of fiduciary malfeasance on the part of the TSP Board with regard to high-risk Chinese corporate ‘bad actors’ littering their new Mutual Fund Window initiative is quite breathtaking — no disclosure, no diligence or screening, no corporate governance and no compliance with federal securities laws,” stated Roger W. Robinson, former Chairman of the Congressional U.S.-China Economic and Security Review Commission.
While choices in retirement investments are crucial, the FRTIB’s lack of transparency, oversight, and cavalier statements regarding the TSP has alarmed numerous members of Congress and a bipartisan coalition that include human rights, trade, and national security organizations.
“It is simply incredible to the Uyghur American community that public servants and veterans could be funding companies that make their profits from genocide,” said Elfidar Iltebir, coalition member and President of the Uyghur American Association. “Genocide-complicit companies need to be off-limits for federal retirement dollars,” said fellow coalition member Louisa Greve, and director of global advocacy for the Uyghur Human Rights Project (UHRP).
The FRTIB and the TSP’s fund managers, BlackRock and State Street, despite questions from the public, have refused to ensure entities in the mutual funds are not under U.S. sanctions, are in compliance with U.S. securities laws, and do not fund forced labor. Instead, they have shifted the responsibility onto TSP participants: “We also wanted to make sure that people who were using it have some investing experience.”
Under U.S. law, the FRTIB — not TSP participants, particularly those serving in the U.S. military — is required to conduct proper fiduciary duty to ensure that federal retirement dollars are not being invested in CCP-owned entities.
“The purpose of government is to provide for the common defense. That is not merely our physical defense, but the defense of our financial system as well. The idea that a government agency would allow the retirement funds of the men and women in our military to be invested in Communist China — which has declared a People’s War against the United States — is both morally bankrupt and financially irresponsible,” stated coalition member, Brian T. Kennedy, chairman of The Committee on the Present Danger: China.
The No TSP for the CCP Coalition has a simple request for the FRTIB – uphold its fiduciary responsibilities and halt the Mutual Fund Window until the FRTIB and/or its fund managers have vetted, removed, or have appropriately labeled/flagged concerning funds. As the fiduciaries of the world’s largest defined contribution fund, the onus is on the FRTIB and fund managers to do due diligence and protect American taxpayers and investors, not TSP participants.