TSP Board Chairman to Resign Following White House Intervention in Retirement Program
Michael Kennedy has served on the board for a decade, overseeing several major initiatives including implementing an employer match for military service members through the blended retirement system and making it easier for participants to access their money.
Officials at the agency that administers the Thrift Savings Plan announced Friday that TSP board chairman Michael Kennedy will resign at the end of June after a nearly a decade at the helm of federal employees' 401(k)-style retirement program.
The news comes nearly a month after President Trump announced the nomination of replacements for Kennedy and two other members of the Federal Retirement Thrift Investment Board and administration officials pressured the agency to halt plans to broaden the TSP's international (I) fund to include more emerging markets, including China. The other two members with replacements named, David Jones and Ronald McCray, will remain on the board so that it has a quorum until the new nominees can be confirmed by the Senate.
Lawmakers and China hawks had been lobbying the Trump administration to put a stop to the effort to move the I Fund to a broader index since last summer, either through the TSP board reversing its decision or through replacement of its members. Critics argued that federal employees, service members and retirees should not be invested in companies involved in the Chinese government's human rights abuses or alleged cybersecurity breaches in the United States.
Kennedy and other officials at the TSP eventually agreed to the White House's demands to put the project on hold, although they justified the decision based on the nomination of new members and the economic upheaval caused by the coronavirus pandemic. Officials have maintained that the decision to broaden the I Fund's investments is in the best interest of participants in the long term, and argued that the question of whether Americans can invest in a foreign company should be left to the Treasury Department's Office of Foreign Assets Control.
Kennedy was first appointed to the FRTIB in June 2010 by President Obama, and was named its chairman in 2011. In his resignation letter, he touted several initiatives implemented during his tenure, including implementation of the 2017 TSP Modernization Act and the blended retirement system, which provided active duty military service members with an employer match to their TSP contributions in exchange for a less generous pension.
"During my time as chairman, I have been most proud of the board's efforts in leading improvements to the Thrift Savings Plan's cybersecurity and infrastructure and adding significant plan enhancements such as additional withdrawal options and the blended retirement system for members of the uniformed services," Kennedy wrote. "With its low cost structure, simplicity, and singular focus on acting in the interest of the TSP's participants, the FRTIB serves as an example of effective federal governance and efficient operations."
Kennedy said that he hoped that by stepping aside now, he could "facilitate a smooth transition" for new board members John Barger, Christopher Burnham and Frank Dunlevy.
"Our conversations were very productive, and I wish these new board members all the best in their important service to the Thrift Savings Plan's participants and beneficiaries."
The Senate Homeland Security and Governmental Affairs Committee has not yet scheduled confirmation hearings for the three nominees.