Trump signs executive order on retirement plans
Trump puts pressure on federal pension fund
US President intends to stop planned purchases of Chinese shares.
US President Administration Donald Trump Demands an independent council tasked with overseeing billions of dollars in federal retirement benefits to freeze plans to invest in Chinese companies that Washington suspects of violating human rights or threatening U.S. security.
The question is whether the administrators of the Thrift Savings Plan (TSP), a retirement savings fund for federal employees and military personnel, should allow their $ 40 billion I-Fund to track an index that includes some Chinese stocks..
The TSP administrators, known as the Federal Retirement Savings Management Board (FRTIB), decided in 2017 to make an investment shift in the second half of 2020 to boost return on investment. They started opening depository accounts abroad to place funds..
But anti-China hardliners in Washington have played back. According to them, US federal pension funds should not fund companies such as the aviation and avionics company Aviation Industry Corp of China, which is the supplier of the Chinese armed forces, and the video surveillance company Hangzhou Hikvision Digital Technology Co Ltd, which was subject to Washington sanctions. for human rights violations.
Increased risk for investors as Chinese companies are not required to comply with strict US financial disclosure rules.
Using national security as an excuse to restrict access to China’s markets goes against economic rules and damages investors’ own interests in the United States, a Chinese Foreign Ministry official said. Zhao Lijian at the daily briefing in Beijing on Wednesday.
Minister of Labor Eugene Scalia, whose department oversees FRTIB, sent a letter to the chairman of the board of directors on Monday Michael Kennedy, in which he was told «stop all steps», investment changes.
The investment shift would put millions of federal employees, retirees and military personnel at a disadvantage: they must abandon any investment in international equities or invest billions of dollars in retirement savings in risky companies that pose a threat to US national security, according to Scalia’s letter..
Press Secretary FRTIB Kim Weaver declined to comment on the letter. However, U.S. law gives the board the authority to «develop investment policy» and perform their duties solely in the interests of the plan participants, making Scalia’s comments as recommendations.
«TSP members want investment options to pass a test of fiduciary responsibility, not any political test, said Jacqueline Simon, policy director of the American Federation of Government Officials, the federal workers’ union. – If you don’t need I-Fund, you don’t need to invest in it».
He referred to «significant and unjustified economic risk» investing in Chinese companies, noting that «the possibility of future sanctions will be a consequence of the actions of the Chinese government», responsible for the spread of the deadly coronavirus.
Trump blamed Beijing for failing to alert the world to the severity and scope of the virus, which has killed more than 80,000 Americans and originated late last year in Wuhan, China. China denied these allegations.
The letters, first published by Fox Business Network and Bloomberg News, coincide with mounting pressure on the White House to halt investment. Reuters reported last month that lawmakers and former officials were taking final steps to halt the plans..
Earlier this month, the White House nominated three candidates for leadership FRTIB, which could pave the way for the cancellation of the investment decision. But it’s unclear when this process will move forward..