Embattled FRTIB Chairman Michael Kennedy announced his resignation last month, effective June 30. The FRTIB oversees and administers the Thrift Savings Plan (TSP). The board will continue to maintain a quorum and be able to conduct official business despite Kennedy’s departure.

 

The FRTIB came under fire in 2019 from several U.S. Senators over the plan to broaden the International (I) fund investments. In November 2017, the board made a decision to expand the I fund and base its investments on a stock index that includes companies from China. The FRTIB noted that by shifting to the broader international index, “TSP will match what all the top 10 of the largest U.S. companies’ 401(k) plans offer, what all the top 10 federal contractors’ 401(k) plans offer, what all six of the six largest target date fund providers offer, as well as what all 20 of the largest public employee benefit plans for state employees offer.” In other words, the overwhelming majority of private sector employers already include Chinese investments in their 401(k) offerings.

In May 2020, the FRTIB postponed further action on the I fund expansion, following pressure from the White House. As we’ve previously reported, President Trump named three new nominees to the FRTIB, including a replacement for Kennedy, earlier this year. They have not yet been confirmed by the U.S. Senate.

FMA is a member of the Employee Thrift Advisory Council (ETAC), which advises and provides counsel to the FRTIB. We have called on the Senate to conduct a thorough vetting process of the proposed nominees to the FRTIB. Further, FMA has urged Congress to refrain from interfering with the FRTIB’s stewardship of the TSP. As Kennedy and ETAC chairman Clifford Dailing wrote in an Op-Ed, “TSP funds are solely the property of plan participants – it is not federal money and it is not taxpayer money . . . The FRTIB is required by Congress to make decisions that are in the best interest of all TSP participants, and not consider issues better left to other federal entities.” They also noted that, “as with all other funds, the choice to invest in the international fund would rest solely with participants.”