Aon argued Monday that switching the benchmark would help the I Fund better match non-U.S. international equity markets and also result in a better risk return, according to documents obtained by Bloomberg. The documents also show that of the 20 largest public defined benefit plans, all of those invested in emerging-market equities have China exposure, arguing that the change to mirror the MSCI All Country World Index would be in line with other large defined contribution plans across the U.S.
Board members at the meeting asked questions including how other target date funds offer international coverage and what plan peers do or don’t do, Weaver said.
Last week, a bipartisan group of senators including Rubio and Jeanne Shaheen, a Democrat from New Hampshire, urged FRTIB Chairman Michael Kennedy again to reverse what they called a “short-sighted decision” to invest the retirement savings of civil servants and military personnel into companies tied to the Chinese government.
The Secretary of the Navy Richard Spencer in a Wall Street Journal op-ed titled “Servicemen’s Savings Shouldn’t Fund Russia and China’’ warned that a change in federal pension policy “will have perverse consequences.’’
“Imagine retiring after a long career serving in uniform, only to learn that your savings all those years had helped fund advanced weapons systems for America’s adversaries. This tragedy will soon become reality unless a decision by the Federal Retirement Thrift Investment Board is immediately reversed,’’ Spencer wrote in the Oct. 23 article.
China hawks outside the government have also pushed the board to reverse its decision and, if necessary, have the Trump administration use executive power to scuttle the move. They argue that Americans are harmed by channeling money into Chinese firms that are allegedly involved in human-rights violations and at the center of U.S. national security concerns.
The hawks illustrate the paradox of funneling money to Chinese firms and the threat it poses by citing companies like ZTE Corp., which was accused of violating Iran and North Korea sanctions, or Hikvision, which the Commerce Department this month added to an export blacklist, accusing it of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang.
This article was provided by Bloomberg News.