Idea of TSP real estate fund gains ground on Capitol Hill

Despite opposition from the managers of the federal Thrift Savings Plan, the House Government Reform Federal Workforce Subcommittee is considering a proposal to add a real estate investment option to the 401(k)-style investment program.

TSP officials contend the new option could hurt other investments and would be costly to administer.

If the measure, which has broad, bipartisan support in the House, is enacted it would be the first time the plan had been changed by Congress over the board's objections.

"It's always been an agreeable arrangement," said a spokesman for the TSP Board. "There's only been one time [in 1996] when the Congress got involved in the addition of funds, and they did so at the board's request."

During the 108th Congress, lawmakers introduced two bills adding options to the plan, including a corporate responsibility fund and a precious metals option. Neither bill had the backing of the TSP Board -- and neither was enacted.

A spokesman for Federal Workforce Subcommittee Chairman Jon Porter, R-Nev., who co-sponsored the measure with Rep. Chris Van Hollen, D-Md., said the legislation, which has not yet been scheduled for markup, is a top priority for the panel.

He said it is a necessary step because the TSP does not give workers a broad enough range of options to ensure that their investments are protected. He added many federal workers lost money when "the big tech bubble burst." He said the real estate option has "less volatility" and is offered by many funds in the private sector.

A Van Hollen aide agreed, saying the sponsors had been approached by federal employees who requested the real estate option.

In testimony before the subcommittee last month, Gary Amelio, executive director of the Federal Retirement Thrift Investment Board, said the proposal would hurt other plan investments if Congress adds funds in a piecemeal fashion, and administering the new option could increase the costs of plan participation by as much as 10 percent.

The TSP Board spokesman would not say whether the board was communicating with any other lawmakers to block the legislation, adding, "We've made our position clear."