Bill Overview
Title: TSP Act of 2022
Description: This bill limits the investments of funds under the Thrift Savings Plan (TSP). Specifically, it prohibits TSP funds, including funds that are accessible through the TSP mutual fund window, from investing in any entity that is based in Russia. The bill also prohibits funds that are accessible through the TSP mutual fund window from investing in any subsidiary of such an entity.
Sponsors: Rep. Budd, Ted [R-NC-13]
Target Audience
Population: Federal employees and military personnel participating in the Thrift Savings Plan (TSP)
Estimated Size: 6000000
- The Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services, including the Ready Reserve.
- There are approximately 6 million participants in the TSP, which include civilian federal employees and military personnel.
- The bill specifically targets investments in Russian entities, which could impact the returns on investment for TSP participants who are currently or planning to invest in such entities.
- The restriction on investment will primarily affect federal employees and military personnel who have investments in TSP and are planning to use the mutual fund window for their investments.
- Globally, the legislative impact is indirect, as it pertains to U.S. government employees and does not directly affect foreign citizens, except potentially those involved in managing or holding stakes of Russian entities, through reduced investment from TSP.
Reasoning
- Most federal employees and military personnel in the United States have some form of retirement funding tied to the Thrift Savings Plan (TSP).
- The Thrift Savings Plan is a significant component of retirement plans for federal employees and will influence their wellbeing scores, albeit indirectly.
- Participants heavily invested in international or Russian market funds might perceive a sharper impact due to anticipated lower returns or portfolio adjustments.
- Many TSP participants are diversified in their investments and may not notice a material impact due to the exclusion of Russia-based investments.
- Most of those affected by this policy are in the middle-income bracket and might be particularly sensitive to changes in investment returns.
Simulated Interviews
Federal Government Employee (Washington, D.C.)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- I heard about the new restrictions on the TSP investments in Russian entities.
- I'm somewhat supportive, since we don't engage with Russian markets heavily and the change aligns with my values.
- I'm concerned this could slightly impact our returns, but the risk seems manageable.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
U.S. Navy Officer (Norfolk, VA)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- The policy seems like more of a political stance than financial prudence.
- Our TSPs are well-diversified, so I expect minimal impact.
- Retirement planning remains stable.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Civil Engineer at Federal Highway Administration (San Diego, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- I wasn't aware we had funds in Russia.
- This change doesn't seem directly relevant to me right now.
- I hope it doesn't complicate my investments down the line.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 9 | 9 |
Retired Military Officer (Austin, TX)
Age: 55 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- The investment shift might lower my returns slightly, but I support the moral stand.
- I've worked hard to diversify over the years specifically to hedge such geopolitical shifts.
- Not very concerned about immediate effects on my retirement plan.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Federal Park Ranger (Seattle, WA)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- I haven’t proactively invested in international markets, so this change is not a huge deal for me.
- As long as my domestic portfolio remains stable, I'm satisfied.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Retired Federal Employee (Miami, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- My primary focus is maintaining my retirement flows.
- International market changes are always risky, so avoiding them might be beneficial in the longer term.
- I don't expect drastic changes to my income.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Customs Officer (Chicago, IL)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- Ideally, the move is in the right direction considering international tensions.
- I don’t feel it's going to impact my TSP in any major way.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Air Force Pilot (Denver, CO)
Age: 42 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- We act to align with national interests; restricting investments in Russian entities fits that action.
- As long as our earnings remain unaffected, I see no problem with the directive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Federal IT Specialist (Boston, MA)
Age: 28 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- Right now, I'm more concerned with immediate savings than international investments.
- The policy seems okay, maybe even helps steady the US economy in some ways.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Nurse at a Federal Hospital (Baltimore, MD)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- I depend on advice, haven't extensively explored international market options.
- From what I've heard, I support the move; it’s a direction I prefer the funds to take.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $1000000 (Low: $500000, High: $1500000)
Year 2: $1000000 (Low: $500000, High: $1500000)
Year 3: $1000000 (Low: $500000, High: $1500000)
Year 5: $1000000 (Low: $500000, High: $1500000)
Year 10: $1000000 (Low: $500000, High: $1500000)
Year 100: $1000000 (Low: $500000, High: $1500000)
Key Considerations
- The primary financial impact will relate to administrative enforcement and oversight costs for ensuring compliance with the new investment prohibitions.
- This legislative change could drive federal employees and military personnel to seek alternative investment opportunities outside of Russia, thereby diversifying portfolios.
- Global geopolitical relationships and the evolving international response to Russian investments could further influence the policy's reception and execution.