Federal Retirement Thrift Investment Board Members Is Delaying the Implementation of the (I) Fund Benchmark Change

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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 Federal Retirement Thrift Investment Board is delaying the implementation of the I Fund benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index.

In 2017 a decision was made to change the (I) Fund index from the MSCI Europe, Australasia and Far East Index to the more comprehensive MSCI All Country World Ex-US Investable Market Index, which includes investments in markets around the world, most notably Canada and China.

In a letter to Labor Secretary Eugene Scalia, from Natl. Economic Council Director, Larry Kudlow and Natl.  Security Adviser, Robert O’Brien.  It stated that the (I) Fund change would “expose the retirement funds to significant and unnecessary economic risk,” citing Chinese human rights abuses and the COVID-19 Pandemic.

The letter further states “The Chinese Government’s intentional thwarting of US investor protections should raise serious concerns about the reliability of financial information from Chinese companies and demonstrate significant concerns to investors, especially retail investors such as TSP beneficiaries of investing in the companies listed on the Chinese exchanges that would be represented in the new index”.

 “The Federal Retirement Thrift Investment Board is set to implement these plans during a time of mounting uncertainty concerning China’s relations with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese government with respect to the global spread of the COVID-19 pandemic,” they wrote.

Scalia wrote. “This now is the only acceptable course, given the concerns expressed by the president’s advisers and the chairs of the SEC and [accounting oversight board], as well, of course, as the president’s own directive to the board”.

Social Security Outlook Makes TSP All the More Important

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Social Security Outlook Makes TSP All the More Important. Can we count on Social Security in the future?

This question is related to the Thrift savings Plan because, if we can’t count on Social Security, we will need more income coming from sources such as the TSP and IRAs.

For the last two years, the report of the Social Security Trustees has said that Social Security would become insolvent by the year 2034. This does not, however mean that Social Security will not be able to pay benefits to those who have earned them once we hit 2034. The Trustees have said that, even if nothing changes for the worse, they will be able to pay 80% of promised benefits. 80% is way, way better than 0%.

In Congress, our elected representatives are asking themselves if it is 2033 yet. It is likely that many Senators and Representatives will have retired by that future date, so they don’t have the level of concern that most Social Security recipients (or future recipients) have. As long as politicians continue to think of the next election, instead of the next generation, we will continue to lurch from crisis to crisis.

There have been suggestions from various interested groups about how to “save” Social Security; and the suggestions vary widely based upon the constituency of the group that is making the suggestion.

Here are some of the suggestions:

• Gradually increasing the full retirement age (FRA). The most common age suggested is 70. Some suggestions would keep the age of 62 for reduced benefits, but the benefits will be reduced more for someone whose FRA was 70 than for one whose FRA was 67. Other suggestions would increase the age for early benefits to 64 or 65. Follow link to read full article: https://bit.ly/2Wn4aGJ