TSP board balks at Congress’ push for real estate fund

The Thrift Savings Plan board is digging in its heels against a plan to add a real estate investment option that is gaining momentum in Congress.

The TSP, federal employees' version of a 401(k) retirement savings plan, invests participants' $180 billion in five basic funds and life-cycle options blending those funds based on anticipated retirement dates. But 163 members of Congress have signed on as co-sponsors of a bill to add a Real Estate Investment Trust fund.

The House Government Reform Subcommittee on the Federal Workforce and Agency Organization will hold a hearing April 26 on the REIT fund option and will mark up the bill immediately following the hearing.

Gary Amelio, executive director of the TSP, and Tom Trabucco, spokesman for the plan, told the board at its monthly meeting Monday that they were asked to testify.

The House panel held a hearing on the same topic last April, shortly after Jon Porter, R-Nev., chairman of the subcommittee, introduced the REIT fund bill.

"Federal employees should not be left out in the cold," Porter said at the time. "Adding a REIT fund option to the TSP is the next logical step. With its resilient earnings and lower volatility, real estate provides a sound investment over the long haul."

But the board, which is made up of five presidentially appointed financial advisers and Amelio, who was hired by the board to run day-to-day operations, is dismayed by the push for the REIT funds.

"I was hired and led to believe this plan was completely free of politics," Amelio said. "It is a blatant violation of fiduciary duty to do onesies."

Onesies, Amelio said, are the addition of funds to the TSP one at a time without taking into account the entire range of options. The board hired consulting firm Ennis Knupp & Associates of Chicago to look at all options. The board expects to hear from the firm on that matter this fall.

Andrew Saul, chairman of the TSP board, said he wants the House subcommittee to wait for Ennis Knupp to finish the assessment before holding another hearing.

"Why we're going through all of this at this point in time I just don't understand," Saul said. "We've made a commitment to Congress and we intend to keep that commitment."

After the bill is marked up in subcommittee, it still must go to committee for markup and must be brought to the House floor for a vote. The Senate also must pass such a bill.

In March, the Employee Thrift Advisory Committee, made up of representatives from federal employee unions and advocacy groups, passed a resolution opposing a REIT fund.

The subcommittee's Democratic contingent requested the April 26 hearing. Reps. Danny Davis, D-Ill.; Chris Van Hollen, D- Md.; Major Owens, D-N.Y.; Elijah Cummings, D-Md.; and Del. Eleanor Holmes Norton, D-D.C., told Porter in a March 31 letter that they wanted a hearing to address the concerns of the thrift advisory committee before marking up the bill.