Senator Marco Rubio (R-FL) introduced Thursday legislation to update the fiduciary duty of the Federal Retirement Thrift Investment Board (FRTIB) to include national security considerations. The FRTIB is an independent agency of the federal government that administers the Thrift Savings Plan (TSP).
If passed, the TSP Fiduciary Security Act (S-1993) would change the FRTIB to include a duty not to harm national security. Specifically, investment of the TSP in Chinese military companies, as well as companies on the U.S. Department of Commerce Entity List, as well as proxy votes by the contractual managers of the TSP that would cause companies the TSP is invested in to harm national security assets, would “presumptively violate fiduciary duty” per this legislation.
“It was incredibly shortsighted and dangerous for the Federal Retirement Thrift Investment Board to attempt to invest American civil servants’ retirement savings in companies that are tools of the Chinese Communist Party,” Rubio said in a statement about the bill. “But it was also revealing of a serious problem: the Board and their friends on Wall Street will get away with using American servicemembers’ own savings to fund threats to U.S. national security if the fiduciary duties binding these money managers only focus on short-term financial value. My legislation would update the Board’s fiduciary duty to more accurately reflect the interests of the TSP’s beneficiaries, rather than the financial interests of Wall Street. ”
According to Rubio, the TSP Fiduciary Security Act would:
- Prevent the use of the FRTIB’s fiduciary duty to justify investments that harm national security by incorporating a duty to not harm U.S. national security.
- Define as a presumptive breaches of fiduciary duty:
– Investments in Communist Chinese military companies.
– Investment in companies on the entity list.
– Proxy votes in favor of transactions that would breach contracts with the federal government, significantly reduce capital expenditures in critical technologies, or outsource critical technologies to China or other countries of national security concerns.
– Proxy votes in favor of nominees to the board of directors who are employed by any entity to which investment in would be a breach of fiduciary duty, or who propose actions for the company they are nominated to that would cause investment in the company to cause a breach of fiduciary duty.
Last month, Senator Tommy Tuberville (R-AL) a bill — Prohibiting TSP Investment in China Act (S-1665) — that would prohibit TSP funds from being invested in any entity based in the People’s Republic of China (PRC).
The legislation follows a series of previous efforts to ban TSP investments to funds that include China. The Federal Retirement Thrift Investment Board, which governs the TSP, voted unanimously in May 2020 to postpone implementation of its decision to change the Thrift Savings Plan’s international (I) fund investments to include indexes that include Chinese companies.