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Senators from both parties this week called on the agency that administers the federal government’s 401(k)-style retirement savings program to reconsider its decision to shift the Thrift Savings Plan’s international (I) Fund to an index that invests in Chinese companies.
Sens. Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., sent a letter Monday to Michael Kennedy, chairman of the Federal Retirement Thrift Investment Board, asking the agency to reverse its 2017 decision to base the I Fund’s investments on a stock index that includes companies from a broader swath of countries, including China. Rubio and Shaheen objected to the change based on the Chinese government’s history of human rights abuses and other national security concerns.
“The FRTIB’s decision to track this [new] index constitutes a decision to invest in China-based companies, including many firms that are involved in the Chinese government’s military, espionage, human rights abuses and ‘Made in China 2025’ industrial policy, and therefore poses fundamental questions about the board’s statutory and fiduciary responsibilities to American public servants who invest in federal retirement plans,” the senators wrote. “This change, which is expected to be implemented next year, will expose nearly $50 billion in retirement assets of federal government employees, including members of the U.S. Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this index.”
The lawmakers noted that several companies included in the new index produce weapons systems for the Chinese military, surveillance cameras used to monitor Uighur Muslims in Xinjiang province, and that some companies have been barred from operating in the United States or have been targeted by U.S. sanctions.
“Were the members of the board aware at the time of the motion to adopt the new index for the I Fund that constituent firms of this index were previously subject to U.S. government sanctions?” the senators asked. “Since the board’s November 2017 vote, the U.S. government has censured constituent firms of the [index]—or the controlling shareholders of such firms—through such measures as designation to the Entity List and federal procurement prohibitions.”
TSP spokeswoman Kim Weaver said in an email that the agency has received the letter.
“We are reviewing it and we will respond in a timely manner,” Weaver said.
Elsewhere on Capitol Hill, senators representing Maryland and Virginia on Tuesday joined the growing outcry from lawmakers regarding the recent decision by the Agriculture Department to reduce the buyout and early retirement payments offered to Economic Research Service and National Institute of Food and Agriculture employees who declined orders to relocate to Kansas City by the end of September.
Democratic Senators Mark Warner and Tim Kaine of Virginia, and Ben Cardin and Chris Van Hollen of Maryland blasted the department for failing to inform employees who had applied for Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments that maximum buyouts would be $10,000 rather than the originally offered $25,000 until one week before the acceptance deadline.
“USDA has stated that its decision to reduce the amount per VSIP was made in order to accommodate all employees who were eligible to receive the buyout,” they wrote. “However, USDA has failed to explain why employees were not notified earlier that VSIP offers would be significantly less than $25,000, considering the agency already knew that more than half of ERS and NIFA employees had declined to relocate by the time VSIP applications were due. We are troubled that USDA did not relay this information to its employees sooner considering the impacts this decision can have on an individual career.”
The senators asked Agriculture Secretary Sonny Perdue how much the department budgeted for VSIP and VERA payments, how the department came to the decision to reduce the maximum buyout payment, and why officials waited until a week before the August 26 deadline to inform employees of the change.
The letter was published just one day after Government Executive reported that, in order to cope with the mass exodus of employees who refuse to move to Kansas City, the department is looking to hire retired former employees on a part-time basis to preserve continuity of service. Those hired under the Reemployed Annuitants program would work from the Washington, D.C., area and receive both a salary prorated to what they made before they retired and their full defined-benefit annuity payments.
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