The bill would change the fiduciary duty of the FRTIB

Recently introduced legislation would change the fiduciary obligations of the Federal Retirement Thrift Investment Board (FRTIB), the agency responsible for administering the Thrift Savings Plan (TSP), to include national security considerations.

The bill was introduced by Senator Marco Rubio (R-FL) and is known as the TSP Fiduciary Security Act (S. 1993).

The legislation :

  • Prevent the use of the FRTIB fiduciary duty to justify investments that harm national security by incorporating an obligation not to harm the national security of the United States.
  • Define as a suspected breach of fiduciary duty:
    • Investments in Communist Chinese military companies.
    • Investment in companies on the list of entities.
    • Proxies vote in favor of deals that would violate contracts with the federal government, significantly reduce capital spending on critical technologies, or outsource critical technologies to China or other countries with national security concerns.
    • Proxies vote in favor of nominees for the board of directors who are employed by an entity for which investing in would be in breach of fiduciary duty, or who propose actions for the company to which they are appointed that would result in a investment in the company breach of fiduciary duty.

Rubio has been steadfast in his efforts to prevent the FRTIB from proposing a change to the underlying index tracked by TSP’s Fund I, which would include Chinese companies he says pose a threat to US national security. United with retirement savings. federal employees. He sent letters opposing the change, introduced bills to block it, and even called on President Trump to remove some of the FRTIB board members.

In a statement about the bill, Rubio said:

It was incredibly myopic and dangerous for the Federal Retirement Thrift Investment Board to attempt to invest the retirement savings of US officials in companies that are tools of the Chinese Communist Party. But it was also indicative of a serious problem: The Board of Directors and their friends on Wall Street will get away with using the US military’s own savings to fund threats to US national security if the bonds Trustees linking these fund managers only focus on short term finances. value. My legislation would update the Board’s fiduciary duty to more accurately reflect the interests of TSP beneficiaries, rather than the financial interests of Wall Street.

The FRTIB maintained that the proposed change for the I Fund is consistent with what other large defined benefit plans currently offer and would not adversely affect investment returns for the I Fund. The agency delayed its decision to go ahead with the change last year.

© 2021 Ian Smith. All rights reserved. This article may not be reproduced without the express written consent of Ian Smith.

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