My money wasn’t lost, but no one could tell me where it was. That was the strange answer I got after calling the Thrift Savings Plan, the U.S. government’s $1 trillion 401(k)-type program, to ask for a list of companies in its international index fund. I had just left my job with the government and was eager to check my savings. The plan discloses only its top 10 international holdings, leaving more than 5,000 others hidden. To track down where my own money was being invested, I had to file a Freedom of Information Act request.
Do you know where your money is? I thought mine was sleeping soundly, tucked away in a boring retirement account. But the answer to my request felt like a scene from my 3-year-old’s favorite book, “Good Night, Gorilla,” when the light goes on and the bedroom is full of exotic animals. I’ve traveled the world as an adviser to a secretary of state and a secretary of commerce, but my passport stamps don’t come close to rivaling the travels made by my savings. Alarmingly, parts of my globe-trotting portfolio are also running counter to American foreign policy priorities.
Indirectly, the retirement savings of U.S. military members and government employees are aiding China’s techno-industrial ambitions, according to data I received that included the plan’s holdings up to the end of 2024. Yes, China and Hong Kong are excluded from the plan’s international fund, but that leaves plenty of capitals and companies that don’t share Washington’s view of Beijing. In Bangkok, for example, American savings are supporting Bumrungrad International Hospital, which last year strengthened its partnership with the Chinese genomics giant BGI. This followed U.S. government moves to blacklist several BGI subsidiaries and restrict their access to U.S. technology, citing the company’s support for the Chinese military and the repression of Uyghurs and other Muslim minorities.
On Singapore’s main stock exchange, my savings were supporting China’s largest privately owned shipbuilding company, Yangzijiang Shipbuilding Holdings, which produces ships that could be mobilized to support Chinese military operations, and that the U.S. government named in an investigation of China’s discriminatory trade practices. My savings were also bolstering the Oversea-Chinese Banking Corporation, which owns one-fifth of one of China’s systemically important banks and helps Chinese firms expand across Southeast Asia and into global markets, a shift the Trump administration is trying to counter with new trade deals.
This is hardly what Senators Jeanne Shaheen and Marco Rubio had in mind in 2019, when they successfully pushed to exclude China and Hong Kong from the U.S. government’s retirement fund. “America’s investors should never be a source of wealth funding the Chinese Communist Party at the expense of our nation’s future prosperity,” they wrote that year.
Indeed, peering into a large index fund is like taking a tour of a hot-dog factory. Once you see everything that goes into the product — the good, the bad, the bizarre — it’s hard to unsee.
U.S. government retirement money has contributed to China’s Digital Silk Road, Beijing’s signature initiative to wire the world. Since 2019, the United States has led a global campaign to ban Chinese tech companies, especially Huawei and ZTE, citing the threat they pose to 5G networks. Meanwhile, the U.S. government’s retirement plan supports 25 companies across 15 countries that have partnered with Huawei or ZTE since 2023, when the fund’s underlying index was selected.
Some of these partnerships are literally laying the groundwork for tomorrow’s technologies in emerging markets around the world. Consequently, foreign governments as well as U.S. government personnel living abroad become more dependent on Chinese infrastructure and services that control communications, smart-city applications and other essential functions.
Parts of my portfolio seem unaware that Russia invaded Ukraine. The U.S. government has been working with partners and allies to restrict capital flows to the Russian economy. At the same time, the government’s retirement plan has supported 28 companies across 12 countries that either continue to purchase Russian energy, have investments in Russian energy companies, produce goods for military or energy use in Russia or operate as financial institutions in Russia.
To be sure, these investments are legal. A spokesperson for the Thrift Investment Board told the Times that the fund follows federal guidelines on “economic and trade sanctions against targeted foreign jurisdictions and regimes, as well as individuals and entities engaging in harmful activity.”
But harm is not hard to find. Problematic investments stem from a see-no-evil approach that has yet to adapt to an era of intensifying geopolitical competition. By delivering diversification at extremely low cost, index funds are one of the greatest innovations for individual investors. But too many funds continue to operate as if the United States were still basking in the glow of Cold War victory instead of racing to remove critical supply chains from Chinese control.
Altogether, U.S. government retirement holdings supporting the Chinese tech firms Huawei and ZTE and those supporting Russian energy and banking totaled about $1.25 billion at the end of last year. That sum is not trivial, but it accounted for only about 1.5 percent of the plan’s international fund. Dropping those investments would have little, if any, impact on returns and would send a message that government retirement money would not be used to support these firms’ balance sheets.
Like most retirement plans, the Thrift Savings Plan doesn’t offer exchange-traded funds, baskets of stocks that trade easily and can give investors a wider range of options with fewer unintended consequences. And it would be foolish to entirely forgo international stocks, given the diversification they provide, not to mention their returns this year, which are mostly beating those of their American counterparts by double digits.
The Thrift plan was wisely designed to prevent politicians from steering federal retirement savings toward favored causes or away from disfavored industries. Once officials begin dictating what the fund can and cannot hold, investment decisions risk shifting with political winds. That independence is a feature, not a flaw, and it should be protected.
But the plan should offer its participants greater visibility and choice. It can start by providing full access to its underlying holdings on a monthly basis, the standard timeline for publicly traded mutual funds; even quarterly access would be an improvement. This may require its index providers to agree to disclosure. But with more than $1 trillion under management, the Thrift program is the world’s largest defined-contribution plan, and has plenty of bargaining power; if needed, it can invite other providers to make available the indexes that determine where participants’ money goes.
While searching for my savings, I discovered how little I knew about what they were up to, and how they were part of one of the most powerful economic forces on the planet. At almost $46 trillion and growing, the influence of all American retirement plans extends far beyond one person’s financial security. They link our daily lives with tomorrow, shaping markets, industries, national security and the world we’ll one day hand off. With those stakes, it’s worth taking a closer look in your own portfolio.
Jonathan E. Hillman is a senior fellow for geoeconomics at the Council on Foreign Relations.
Source images by JamieB and BardoczPeter/Getty Images
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