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The Federal Retirement Thrift Investment Board has reaffirmed its decision to move the Thrift Savings Plan’s international fund to a new benchmark, amid growing bipartisan congressional opposition.

The board voted Wednesday to press ahead with plans to move the I fund to the Morgan Stanley Capital International All Country World Ex-U.S. Investable Market Index (MSCI ACWI Ex-US IMI), which covers 22 developed and 26 emerging markets and consists of large, mid and small-cap stocks from more than 6,000 companies, including Chinese securities.

The FRTIB first decided back in 2017 it would move the I fund to this emerging markets index, but recent, bipartisan congressional opposition prompted the board to reconsider.


A group of senators, led by Marco Rubio (R-Fla.) and Jeanne Shaheen (D-N.H.) have argued the change would expose federal retirement assets to “severe and undisclosed” material risks associated with Chinese companies listed on the emerging markets index.

The board’s decision wasn’t unanimous, with one out of the five board members voting “no.”

Bill Jasien said he feared the decision would limit options for TSP participants who wished to invest internationally but didn’t want to invest in Chinese interests.

He suggested the board pause its plans on the I fund and work with Congress to conduct further study on the topic. Specifically, he said Congress should explore whether it could add more TSP funds.

But the four other members were all in agreement: moving the I fund to the emerging markets index would improve the anticipated returns for the plan’s participants, a fact the board said it couldn’t ignore.

They cited a recent review from Aon Hewitt Investment Consulting, the company who initially suggested the TSP should make this change back in 2017.

Not moving the I fund to this index would make the TSP an outlier among other comparable 401(k) style plans, board members said. The top 10 publicly traded U.S. companies and the top 10 federal contractors all offer their defined contribution participants access to an emerging market equity, which includes Chinese equities, Aon said.

One board member, Dana Bilyeu, questioned whether it was the FRTIB’s role to consider and grapple with these political questions.

The board, she said, exists to serve the fiduciary interests of the greatest number of TSP participants.

She suggested the Office of Foreign Assets Control at the Treasury Department, which administers and enforces economic and trade sanctions based on foreign policy, should consider whether federal retirement assets could be exposed to harmful Chinese interests.

“I feel fairly strongly — while it’s a great discussion for us to have — a better place for this to occur is at OFAC,” she said.

She and the other board members said Congress designed the TSP and the FRTIB so both would be free from discussions of policy and politics.

“Congress discussed the fact that unlike funds in the defined benefit program, funds in the TSP would be the property of the individual account holders and not the federal government. The money in the Thrift Savings fund, in essence, is held in trust for the employee and managed and invested on the employee’s behalf until the employee is eligible to receive it,” Megan Grumbine, the FRTIB general counsel, said. “Whether the money is invested in government or private securities is immaterial with respect to employee ownership. The employee owns it, and it can’t be tampered with by any entity, including Congress.”

The Employee Thrift Advisory Council, a coalition of federal employee unions and other associations, were asked to consider the I fund move as well. The council collectively agreed it should be up to the TSP participants themselves to decide how they should invest their money in the plan.

“Looking at the design of the plan, which has always been to enhance the opportunities available to the participants and members and to mirror the opportunities available in the private sector… our group is saying, ‘I would like to have that opportunity,'” Clifford Dailing, the council’s chair and a leader on the National Rural Letter Carriers’ Association, said. “Not withstanding other political issues and reasons… [we] should be leaving it up to the participants to have the options to invest however they choose.”

Still, there’s continued bipartisan interest in Congress to block the TSP from moving forward.

“There’s no excuse for this decision,” Shaheen said Wednesday in a statement. “This should have been any easy call to reverse course, yet the board has decided to double down on this dangerous proposal. It’s reckless to prop up companies that threaten U.S. interests and values, and it’s particularly egregious that this is being done with the retirement savings of federal workers, including our military and civilian workforce.”

Rubio and Shaheen introduced legislation last week that would prevent the TSP from moving to the emerging markets index. Specifically, the Taxpayers and Savers Protection (TSP) Act would prevent the TSP funds from being invested in securities listed on certain foreign exchanges.

The bill has bipartisan support from Sens. Kirsten Gillibrand (D-N.Y.), Mitt Romney (R-Utah), Josh Hawley (R-Mo.), Rick Scott (R-Fla.) and Mike Braun (R-Ind.).

Rubio and Shaheen have said Rep. Mark Meadows (R-N.C.) is expected to introduce a House companion.