Many Americans view China as a significant threat, making it alarming that their retirement funds could be supporting Chinese companies. This effectively means American retirees are inadvertently bolstering the Chinese military, a concerning development that needs to be addressed.

The Protecting Americans’ Retirement Savings Act (PARSA) aims to prevent this by prohibiting private pension plans governed by the Employee Retirement Income Security Act (ERISA) from investing in companies controlled by or located in adversarial nations like China, Russia, Iran, and North Korea. Furthermore, it mandates investors to disclose and justify any existing investments in these countries and sanctioned entities.

A few years ago, concerns were raised about proposals to direct investments in the Thrift Savings Plan (TSP), the pension plan for federal employees and service members, towards Chinese assets. In 2020, the Trump administration successfully blocked the TSP's I Fund from shifting to an index that included Chinese and Russian firms. This action proved prescient when the Russian stock market plummeted after the invasion of Ukraine, safeguarding federal retirees from significant losses. However, Chinese holdings in ERISA plans still present a similar risk to private sector retirees.

Investing in Chinese companies carries inherent risks. Chairman Xi Jinping's recent actions have raised questions about the independence of Chinese public accounting firms from government influence. This lack of transparency makes it challenging to accurately assess the financial stability of Chinese companies, increasing the risk for American investors.

From a national security perspective, these investments are particularly troubling. The Chinese Communist Party's control over companies allows potential access to their financial data, raising security concerns. Moreover, investing in Chinese companies indirectly supports the Party's activities, including human rights abuses and military expansion.

Millions of Americans rely on ERISA plans for their retirement security. Safeguarding these funds is paramount. Several states have already divested pension funds from China, following President Trump's TSP executive order. Private sector retirees deserve the same level of protection.

Congressional action is necessary. Passing the PARSA Act is vital to protect American retirement savings and restrict capital flow to a potential adversary. Waiting for the Biden administration to act is insufficient. This legislation offers a crucial step towards addressing both the financial risks to retirees and the broader national security concerns related to China.