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EagleDog  
#1 Posted : Friday, April 2, 2021 8:20:29 AM(UTC)

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Social Divesting Proposal Threatens to Gut Some TSP Funds
March 31, 2021

From two sources, the TSP is being asked to dump fossil fuels from TSP funds. Could the president issue an Order that would hold up in court?

The federal government’s Thrift Savings Plan (TSP) is drawing attention. No doubt, this is because the TSP has been so successful and growing fast. The TSP has made news in the national press as a model retirement plan. The reality is that the returns for the TSP are very good and the plan is easy for investors to use. The government match is also excellent.

The plan’s success is obvious. It started in 1987, has expanded over time, and now has more than $723 billion in assets.

As it grows, so does the temptation to use the power of this much money for political purposes. Elected officials, interest groups and others are noticing the money and have their own ideas about how it should be invested.

FedSmith published a recent article about proposed legislation to divest fossil fuels from the TSP funds. A short time later, a national publication came out with an article urging President Biden to accomplish fossil fuel divestment by quickly signing an Executive Order to rid the TSP funds from fossil fuels.

Should the power of the TSP be used as a way to implement “climate solutions?” In this instance, that is the purpose of the “climate solutions” movement. No doubt, some or perhaps many federal employees may agree with this goal.

Would these employees be willing to use the power of the TSP’s assets for this purpose? The recent article in the New Yorker argues federal employees are “fed up with dirty fuels lurking in their nest eggs.” The conclusion is supported by one union official in the Environmental Protection Agency.

According to the Federal Retirement Thrift Investment Board (FRTIB), the TSP funds are a small share of the overall universe of investors. Restricting TSP investments would make the U.S. civilian and military workforce and retirees second-class investors.

First, this action would gut four of the TSP’s five funds. It would require the FRTIB to pick winning and losing stocks and violate the concept of passive managed investing now used by the TSP (and as required by law).

Second, the action would likely result in lower risk-adjusted returns to TSP participants. In other words, federal employees who retire would have less income after they retire in the opinion of those making the investment decisions for the TSP.

Conclusion:

The TSP is a big target. As the total assets start to approach a trillion dollars or more, the pressure will increase from interest groups seeking help to further their cause. There will also be more in Congress wanting to use the money for their own political ends.

To date, the TSP has been free from overt political influence. No doubt, those with a political agenda, such as those cited in the New Yorker article, will pop up with their arguments and seeking action to further their goals. With a new administration taking office in January, and one that is overtly favorable to arguments such as those embracing actions that will, at least in theory, further their agenda regarding the climate of our planet, there will be other attempts to alter the TSP in various ways.

https://www.fedsmith.com...s-to-gut-some-tsp-funds/
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thanks 1 user thanked for this useful post.
John Henry on 4/2/2021(UTC)
roger.d  
#2 Posted : Friday, April 2, 2021 9:00:35 AM(UTC)
roger.d

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If they want to offer a socially conscious fund, do so. But to remove the current offering of the C, S, and I fund because they contain what some consider less than desirable business practices is silly. Who gets to decide what is undesirable? The Vanguard fund contains Amazon. I consider Amazon to be a environmental threat. The extra boxes and packing material that is used is tremendous. The energy needed to make those boxes/packing material. To ship it to Amazon. To ship the product to the end user.


Those who are, know those who are not.

If you think they are after you, what did you do wrong?
Tanker1497  
#3 Posted : Saturday, April 3, 2021 4:36:47 AM(UTC)

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What I find to very concerning is the move to a means test.(how much is too much in retirerment) There was talk about stopping Social Security to those with big fat pensions. Sounds good to most, why should a person making millions a year and a pension in six figures get SS. But like all the recent bills passed, down on page 3000 its says those with fat 401k's over ???, must first use there own money before receiving any SS. We all know we have a bunch of million dollars 401k government employees. Then there are those hundred of thousands over 500k to 1 million in 401k's.
They can change the rules when ever they want, and they have to some point in the retirement system.
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fullstop on 4/7/2021(UTC)
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