S 1368119th CongressIn Committee

TSP Fiduciary Security Act of 2025

Introduced: Apr 9, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The TSP Fiduciary Security Act of 2025 would place an explicit national-security overlay on the investment decisions of the Thrift Savings Fund (TSP), which is the retirement program for federal employees and members of the uniformed services. The bill requires TSP fiduciaries to act, to the maximum extent practicable, so that the Fund’s investments and the exercise of any related voting rights do not harm U.S. national security. It also creates a regulatory framework to implement and enforce these duties, provides temporary liability protections for fiduciaries, and tightens restrictions on investments in China-related entities through the TSP mutual fund window. The act was introduced in the Senate by Sen. Rick Scott (R-FL) on April 9, 2025.

Key Points

1Fiduciary duty to national security: Amends the fiduciary standard to require, to the maximum extent practicable, preventing the Thrift Savings Fund’s investments and voting rights from harming the national security of the United States.
2Temporary fiduciary immunity: Grants fiduciaries no monetary damages or civil penalties for breaches of this standard, but this protection ends on January 1, 2027.
3Regulatory implementation: Within one year after enactment, the Secretary of Labor (in coordination with the Secretaries of Defense, Treasury, Homeland Security, and the Attorney General) must prescribe regulations implementing the national-security standard. This includes standards for investments and for exercising voting rights, plus a process to review voting rights to ensure compliance.
4Covered votes and standards: Regulations must establish what constitutes a compliant versus noncompliant vote, including factors such as contracts with the federal government, defense-critical technology, and business activities with entities linked to national-security risk. The bill creates mechanisms to presume noncompliance in certain scenarios (e.g., investments in certain restricted entities or countries) and defines “covered country” and “covered vote.”
5Reporting requirement: The Secretary of Labor must report to Congress every year (beginning two years after enactment) on investments and voting rights reviewed for compliance, and enforcement outcomes with justification.
6China-related restrictions in the mutual fund window: Prohibits mutual funds accessible through the TSP mutual fund window from including securities of any entity based in the People’s Republic of China or its subsidiaries.

Impact Areas

Primary group/area affected:- Federal employees and members of the uniformed services who participate in the Thrift Savings Fund, and the Federal Retirement Thrift Investment Board that manages the TSP.Secondary group/area affected:- U.S. Department of Labor (as regulator of fiduciary standards), Department of Defense, Attorney General, Department of Homeland Security, Department of the Treasury, and the U.S. government’s national-security and trade control frameworks (e.g., BIS, and entities listed by the Commerce Department and law-designated lists).Additional impacts:- Compliance and administrative costs for the TSP and its fiduciaries to implement new standards, reviews of voting rights, and annual reporting to Congress.- Potential shifts in the fund’s portfolio composition due to stricter standards and the China-related prohibition in the mutual fund window.- Possible broader policy and geopolitical implications related to investing in restricted or “covered” countries and entities.Thrift Savings Fund (TSP): The federal government’s retirement investment program for federal employees and military personnel.Fiduciary: A person or board legally responsible for managing others’ assets in the best interests of the beneficiaries.Voting rights: The ability to vote on corporate matters of companies in which the fund invests, which can influence company policies and governance.Mutual fund window: A feature allowing TSP participants to invest in a broader set of mutual funds beyond the core funds.Covered country / covered vote: Designations and voting decisions identified by regulators as potentially harmful to national security, triggering stricter scrutiny or presumed noncompliance.

Generated by gpt-5-nano on Oct 31, 2025