Fedweek

The TSP's decision to delay the change ceded to political pressure but without acknowledging Labor Department sway over its investment decisions.

The TSP has decided to put off implementing a previous decision to begin using a broader index for the international stock I fund, following several actions by the Trump administration against the change largely because China would be among the countries to be added.

The program’s governing board voted for the delay after President Trump made nominations for three new members for the five-member board, to replace members whose terms have expired. Also, at the direction of White House officials, Labor Secretary Eugene Scalia has told the TSP’s governing board to stop making arrangements for the change, which the board first approved in 2017 and then reaffirmed last year.

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“Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new Federal Retirement Thrift Investment Board Members, pending further study, the board is delaying the implementation of the I fund benchmark change,” the TSP said in an announcement.

The TSP had said it expects to make the change to the broader I fund index later this year; but assuming the nominees are confirmed by the Senate, the board could then vote to cancel it. Given that it can take months for nominees to be approved, the letter from Scalia amounted to an attempted short-cut of that process.

The TSP is an independent agency but it was unclear how the board would respond to what was couched as a direct order. Now, the TSP board’s decision to delay the change essentially produced the same result without an acknowledgement by the TSP that the Labor Department has the authority to direct its investment policies.

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