S1368-119

What This Bill Does

This bill strengthens national security protections for the Thrift Savings Plan (TSP) - the retirement savings program for federal employees and military service members. It prohibits TSP investments in Chinese companies and those from other adversary nations, and requires fiduciaries to consider national security when making investment decisions and exercising voting rights.

Who Benefits and How

• Federal employees and military service members (TSP beneficiaries) benefit from protections ensuring their retirement funds are not invested in entities that could harm U.S. national security.
• Domestic defense contractors and U.S. technology companies may benefit as TSP funds would be redirected away from Chinese and adversary-nation companies toward other investment options, potentially increasing capital flows to U.S. firms.
• National security agencies (DOD, DHS, Treasury) gain oversight authority over TSP investment and voting decisions, expanding their influence over retirement fund management.

Who Bears the Burden and How

• The Federal Retirement Thrift Investment Board faces significant new compliance requirements, including coordinating with multiple federal agencies (Labor, Defense, Homeland Security, Treasury, and Justice) to ensure investments meet national security standards.
• The Secretary of Labor must prescribe new regulations within one year and submit annual compliance reports to Congress, adding administrative responsibilities.
• TSP fund managers and mutual fund providers face restrictions on investment options and must screen out Chinese-based entities and their subsidiaries from mutual fund windows.

Key Provisions

• Adds a new fiduciary duty requiring TSP managers to prevent investments from harming U.S. national security "to the maximum extent practicable"
• Prohibits TSP mutual fund window investments in securities of entities based in China or their subsidiaries
• Presumes non-compliance for investments in entities on the Communist Chinese military companies list or the Commerce Department's Entity List
• Restricts shareholder voting rights that could approve transactions benefiting adversary nations or electing directors affiliated with listed Chinese military companies
• Requires the Secretary of Labor to submit annual reports to Congress on TSP compliance with national security requirements
• Provides temporary liability protection for fiduciaries through January 1, 2027, for breaches of the national security investment requirement