President Joe Biden’s nominees to serve on the Federal Thrift Retirement Investment Board (FTRIB)—the main pension fund for federal government employees— should pledge not to invest funds into China-based companies that undermine U.S. national security, three Republican senators said on April 6 in a letter to the nominees.
“We are deeply concerned by the Federal Retirement Thrift Investment Board’s history of voting to invest federal employees’ retirement savings into China-based companies, including firms involved in the Chinese government’s military, espionage, human rights abuses, and aggressive industrial policy designed to undermine U.S. industry,” read a joint letter by Sens. Marco Rubio (R-Fla.), Tom Cotton (R-Ark.), and Tommy Tuberville (R-Ala.).
The letter was addressed to Biden’s four nominees to serve on the board: Michael Gerber, senior managing director of FS Investment Solutions; Stacie Olivares, a board member of Core Scientific; Dana K. Bilyeu, executive director of the National Association of State Retirement Administrators; and Leona M. Bridges, commissioner of the San Francisco Employees’ Retirement System.
Rubio has also put a hold on the confirmation of the four nominees until he is satisfied that such investments will not happen on their watch, according to a statement from the senator’s office.
“The FRTIB’s previous actions have demonstrated a willingness to invest American retirement savings into Chinese companies working to undermine U.S. interests and national security, as well as exposing federal employees’ retirement savings to considerable risk. This cannot be allowed in the future,” the letter stated.
The senators were referring to a 2017 decision by the body to shift the index it uses for its international stock investment fund to the broader MSCI All Country World ex-U.S. Investable Market Index, which represents 99 percent of the international equity market and is 7.5 percent weighted to Chinese companies. The move was due to take effect in the summer of 2020, but under significant pressure from the Trump administration and congress members, FRTIB announced that year that it had “deferred” this transition.
The fund currently relies on another MSCI index that represents just 58 percent of the international market, and excludes China.
“Had the planned transition taken place, China would be receiving the third-most investment of any nation in the fund, potentially exposing billions of dollars in federal employee retirement assets to risks associated with many of the Chinese companies included in the index,” the senators wrote.
In the letter, the lawmakers asked that the nominees commit to guaranteeing that the fund will not emulate the All Country World Index; ensuring that no money from the Thrift Savings Fund gets invested in any security listed on an exchange where the Public Company Accounting Oversight Board—the industry oversight body for auditors—is unable to conduct proper audits as required under U.S. law; and voting to make sure that no federal employee retirement funds go to Chinese companies acting adversely to U.S. national security.