Lawmakers lean on TSP board to study real estate investment fund

House lawmakers are pressing the Federal Retirement Thrift Investment Board to bring in a consultant to investigate the feasibility of adding a real estate investment fund to the Thrift Savings Plan.

In a July 6 letter to Chairman Andrew Saul, four House members reminded him of the panel's agreement in April to hire an investment consultant to look into the possibility of adding a REIT fund to the TSP, which currently has five fund options. A sixth option, called the "life-cycle" fund, is being added this summer. This option fund automatically diversifies and manage a portfolio of the existing funds for government workers.

In the letter, Reps. Tom Davis, R-Va.; Jon Porter, R-Nev.; Henry Waxman, D-Calif.; and Danny Davis, D-Ill., wrote: "It is imperative that Congress obtains timely and objective information from the TSP board so it can make responsible decisions" and asked them to hire a consultant "as soon as possible."

The congressmen also asked the board to provide a written report by Jan. 1, 2006, detailing the expert's conclusions.

House members will use the report's finding to consider the Real Estate Investment Savings Act (H.R. 1578), according to the letter. The bill was introduced in April and received overwhelming support from House lawmakers at the time. The TSP board, however, unanimously opposed the addition of such a fund.

In testimony before the House Government Reform Subcommittee on the Federal Workforce and Agency Organization on April 19, Saul and TSP Executive Director Gary Amelio voiced strong resistance to adding a REIT fund.

"For the TSP this would be the wrong fund at the wrong time," Saul said.

The request for an independent investment consultant was based on a suggestion Amelio made at the hearing, according to the letter.

Amelio said the board conducted an analysis "looking specifically at REITs directly in response to the subcommittee's request. However, the fiduciaries have decided to now go beyond that [and] engage a professional investment consultant to look at the universe of investments, which would include REITs."

Despite their objection to the addition of a real estate-based fund, the board moved ahead with its promise to hire an investment consultant and issued a solicitation on April 29 for a "contractor to provide ongoing expert consulting advice." The TSP has not yet awarded the contract.

TSP board spokesman Tom Trabucco said Saul received the letter Thursday and will respond.

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