TSP Fiduciary Security Act of 2026

Bill Number

H.R. 7357

Origin Chamber

House

Congress

119th Congress, Session 2

Status

Introduced

Latest Action

2026-02-04: Referred to the House Committee on Oversight and Government Reform.

Last Updated

2026-02-21T04:53:24Z

AI-Generated Summary

Purpose of the Legislation

The TSP Fiduciary Security Act of 2026 aims to strengthen the management of the Thrift Savings Fund (TSP), a retirement savings plan for federal employees and uniformed service members, by incorporating national security considerations into fiduciary duties. It ensures that TSP investments and related decisions prioritize the best interests of beneficiaries without undermining U.S. national security.

Key Provisions

• Fiduciary Duties Expansion: Amends Section 8477 of title 5, U.S. Code, to require TSP fiduciaries (primarily the Federal Retirement Thrift Investment Board) to manage the fund in the best interest of beneficiaries, including preventing investments and the exercise of voting rights (e.g., shareholder votes on company matters) from harming U.S. national security "to the maximum extent practicable."
• Temporary Liability Protection: Fiduciaries face no personal liability or civil penalties for breaching the new national security duty until January 1, 2027, providing a one-year grace period to adjust.
• Regulatory Requirements: Within one year of enactment, the Secretary of Labor, consulting with the Secretaries of Defense, Homeland Security, Treasury, and the Attorney General, must issue regulations establishing:
• Standards for reviewing TSP investments and voting rights for national security compliance.
• A review process for voting rights, including factors that could deem a vote non-compliant (e.g., supporting transactions that breach federal contracts over $10 million, reduce U.S. defense-related production, or outsource critical technologies to "covered countries").
• Presumptions of Non-Compliance:
• Investments in entities on lists of Communist Chinese military companies (under the Strom Thurmond National Defense Authorization Act) or the Commerce Department's Entity List, including their affiliates, are presumed to harm national security.
• Certain shareholder votes are presumed non-compliant if they approve transactions (e.g., mergers, asset sales) or elect board members linked to adversarial entities that could jeopardize U.S. defense resources, critical technologies, or federal contracts.
• Covered Countries and Votes: Defines "covered countries" as China, Russia, North Korea, Iran, Syria, Sudan, Venezuela, Cuba, state sponsors of terrorism, or others posing undue national security risks. "Covered votes" include approvals of business transactions or board elections that could facilitate risks.
• Prohibition on Chinese Investments via Mutual Funds: Amends TSP mutual fund window rules to ban investments in securities of entities based in the People's Republic of China or their subsidiaries.
• Reporting and Oversight: Requires annual reports from the Secretary of Labor to Congress on reviews of TSP investments and votes, including enforcement outcomes and justifications. Reviews for compliance do not count as exercising voting rights themselves.

Significant Changes to Existing Law

• Addition to Fiduciary Standards: Builds on existing TSP fiduciary duties under title 5, U.S. Code, by explicitly linking them to national security, which was not previously required.
• New Regulatory Framework: Introduces mandatory inter-agency regulations and presumptions against specific foreign investments and votes, shifting from a purely financial focus to one incorporating security risks.
• Investment Restrictions: Adds a outright ban on China-based entities through the TSP's mutual fund window, limiting participant options in that feature.
• Temporary Immunity: Provides short-term protection from liability for the new duty, absent in prior law, to facilitate implementation.

Potential Impacts

• On Government Agencies: Increases workload for the Departments of Labor, Defense, Homeland Security, Treasury, and Justice in developing regulations, conducting reviews, and reporting to Congress, potentially requiring new resources or coordination.
• On Citizens: TSP participants (about 6 million federal civilians and military members) may see restricted investment choices, possibly affecting retirement returns if high-performing foreign options are excluded; aims to protect long-term savings from security-related risks but could limit diversification.
• On International Relations: Reinforces U.S. policies restricting economic ties with adversaries like China and Russia, potentially escalating tensions by signaling divestment from their entities; may influence global investment flows away from "covered countries."

Main Stakeholders Affected

• Federal Retirement Thrift Investment Board: Primary fiduciaries responsible for implementing changes and facing new compliance burdens.
• TSP Participants: Federal civilian employees and uniformed service members whose retirement savings are directly managed under these rules.
• Federal Agencies: Departments of Labor (lead regulator), Defense, Homeland Security, Treasury, and Justice (consultants); Oversight and Government Reform Committee (House) and Homeland Security and Governmental Affairs Committee (Senate) for oversight.
• Investors and Entities: U.S.-based companies with ties to covered countries; foreign entities (especially Chinese) barred from certain TSP investments, potentially impacting their access to U.S. capital markets.

Notable Legal, Constitutional, or Political Implications

• Legal: Enhances fiduciary accountability by integrating national security into ERISA-like duties for government plans (TSP is akin to a 401(k) for feds), but the temporary immunity clause may raise questions about enforcement gaps during the grace period. Presumptions create a rebuttable framework, allowing challenges in court if deemed overly broad.
• Constitutional: Could intersect with due process concerns if regulations limit fiduciary discretion without clear standards; voting rights reviews might touch on free speech issues for shareholder actions, though as a government fund, TSP decisions are subject to public interest overrides rather than private rights.
• Political: Reflects bipartisan concerns over foreign influence in U.S. retirement funds, aligning with broader national security strategies (e.g., against China); may spark debates on politicizing investments versus protecting public servants, potentially influencing future pension reforms or international trade policies.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Fine, Randy [R-FL-6]

Cosponsors (4)

Rep. Harrigan, Pat [R-NC-10], Rep. Moran, Nathaniel [R-TX-1], Rep. Stefanik, Elise M. [R-NY-21], Rep. Rutherford, John H. [R-FL-5]

Recent Actions

• 2026-02-04: Referred to the House Committee on Oversight and Government Reform.
• 2026-02-04: Introduced in House
• 2026-02-04: Introduced in House

Bill Versions

• TSP Fiduciary Security Act of 2026 — issued 2026-02-04 — PDF (11 pages)