Chairman of House Oversight and Reform subcommittee says instructing the Thrift Savings Plan not to shift international investments to a broader index effectively “politicized” the independent agency.
The chairman of a House subcommittee on Thursday accused the Trump administration of “politicizing” the independent agency responsible for administering the federal government’s 401(k)-style retirement savings program by ordering it to halt plans to move the Thrift Savings Plan’s international (I) fund to a broader index of investments.
On May 11, Labor Secretary Eugene Scalia relayed an order from President Trump to the members of the Federal Retirement Thrift Investment Board to halt ongoing efforts to shift the index upon which the TSP’s I Fund is based from the MSCI Europe, Australasia and Far East Index to the more comprehensive MSCI All Country World Ex-US Investable Market Index, which includes investments in more than 48 countries, most notably Canada and China.
The letter comes at the end of a months-long campaign by some lawmakers and China policy hawks outside of government, concerned about national security and Chinese human rights abuses, to lobby Trump to intervene in the matter, culminating with Trump nominating three people to replace existing members of the TSP board. The Federal Retirement Thrift Investment Board, which administers the TSP, ultimately acceded to the White House’s demands on May 13, delaying the move until after the new board members are confirmed.
In a letter to Scalia on Thursday, Rep. Gerry Connolly, D-Va., who chairs the House Oversight and Reform Subcommittee on Government Operations, blasted the administration over its “unprecedented interference” in the TSP’s operations.
“This administration has overstepped its authority and politicized a well-established, independent board whose sole mission is to help public servants maximize their retirement savings,” Connolly wrote. “With all due respect, please keep President Trump away from the retirement plans of federal employees and service members. He has done enough damage already.”
Connolly said that the Labor Department and White House’s actions may constitute a breach of the law establishing the TSP, which states that only the Federal Retirement Thrift Investment Board may manage the program’s operations.
“In implementing this unprincipled and unprecedented policy, it appears that DoL and the Trump administration may have violated the bipartisan Federal Employees Retirement System Act of 1986, signed into law by President Reagan,” Connolly wrote. “The law established the FRTIB as the only independent entity that has legal authority to administer and manage the TSP, the retirement savings and investment plan for federal employees and members of the uniformed services.”
The lawmaker described the move as an effort to “disingenuously stage a hard line on China” in the wake of the coronavirus pandemic, and noted that the administration has taken no action to limit investments in China more broadly through the Treasury Department’s Office of Foreign Assets Control, a common refrain among TSP officials and federal employee groups when the I Fund change first came under scrutiny.
“Instead of circumventing the authority granted only to the statutorily independent board, the administration should be taking its concerns highlighted in its May 11 letter to the Office of Foreign Assets Control within the Department of the Treasury,” Connolly wrote. “This office has the authority to determine which countries and companies are inappropriate trading or business partners for the United States.”
A Labor Department spokesperson defended the administration's actions. "The Federal Retirement Thrift Investment Board acted unanimously and appropriately in indefinitely deferring the Thrift Savings Plan’s investments in risky Chinese companies in accordance with President Trump’s directive and the serious concerns expressed by the national security advisor, assistant to the president for economic policy, and the secretary of Labor," the spokesperson said. "Rep. Connolly remains free to invest in any companies of his choosing."
Connolly demanded that Scalia provide the committee with “all documents” related to the Labor Department’s role in pressuring the TSP board to halt its planned change to the I Fund by June 5.
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