Skip to main content

TVARS' Poor Funded Status


Inadequate contributions from TVA continue to be the primary cause of TVARS’ poor funded status. TVA’s contributions to TVARS have not kept pace with TVA’s pension expense. They have also not kept pace with TVA’s contributions on behalf of TVA employees covered by the Federal Employee Retirement System (FERS), including TVA Board members.

TVARS’ investment performance has been very good. As of December 31, 2013, TVARS’ investment performance benchmarked against a universe of over 800 pension funds was top decile for the past three years, top quartile for the past ten years, and 28th percentile for the past 20 years with an annualized investment return of 8.4% net of fees.

TVA retiree benefits are not excessive. Prior to the 2009 benefit reductions, comparisons of total benefits were made, excluding legacy pension plans due to lack of data. TVA employees’ total benefits were found to be below those of federal employees covered by FERS, below the median of eleven utility peers studied, and below the median of the entire utility industry.

Given TVA’s plan to contribute $250 million to TVARS in fiscal year 2014, there is no reason to believe TVARS’ funding status will meaningfully improve. TVARS was underfunded by $4.3 billion at the end of fiscal year 2013. TVA’s fiscal year 2013 net periodic benefit cost was $549 million. TVA estimates paying pension benefits of $720 million in fiscal year 2014, including payments under the Supplemental Executive Retirement Plan (SERP) which is not part of TVARS.

Comments

  1. AnonymousFebruary 11, 2014 at 7:17 PM

    Leonard, not only is the system underfunded, I personally have went in the hole on my retirement take home every year since I retied in 2004. I appreciate all the work you do to at least keep our system going.
    Larry peacock

    ReplyDelete
    Replies
    1. Leonard J. Muzyn, Jr., CFAFebruary 11, 2014 at 9:23 PM

      Thanks Larry. I think there is a lot of misinformation out there. I hope this helps clear some of it up.

      Delete
  2. AnonymousFebruary 12, 2014 at 5:52 PM

    Thank you for your unwavering support for retired TVA working folks. You have done this even under TVA management’s unlawful duress. We are grateful for your strength demonstrated when others have caved to TVA management pressure to sell out TVA retirees.

    The data you display below should be seen by the Federal Court considering the suit filed earlier on our behalf, all Tennessee Valley Congress members, and the department of Justice in Washington DC. There is multi-billion dollar wrong doing going on at TVA by the Board and Senior Management. It is not taxpayer money but ratepayer money that should be funding TVA’s pension and the U.S. Justice Department in Washington should pursue the slight-of-hand occurring in TVA to avoid the statuary obligations in the TVA Act regarding pension obligations that taxpayers may someday have to pay instead of ratepayers, as intended.

    Thanks again for your faithful service to TVA retirees,

    ReplyDelete
  3. AnonymousFebruary 12, 2014 at 9:21 PM

    Once again another great report. You are the only board member who understands what the phrase fiduciary duty means.

    ReplyDelete
  4. AnonymousFebruary 13, 2014 at 9:34 AM

    The acceptance of the multimillion bonuses for the highly compensated executives should be likened to criminal activity in the light of the data you give. They are truly "feathering their own nests" at the expense of the employees (now retirees) that built this great organization. Thank you, Leonard, for being such a good representative and advocate for TVA retirees. I encourage all present TVA employees to continue to support you because retirees no longer have ANY input into the process. I think that's very sad, don't you?

    ReplyDelete
  5. AnonymousFebruary 13, 2014 at 9:48 AM

    Thanks for your work and this report. TVA appears to be deliberately underfunding the retirement system of the employees who helped build and maintain the system. I am grateful for the job I had at TVA and the years of service but I can see from their actions of not funding the retirement system and maintaining it that the retirees are not of a concern to them. It appears that they are doing the same thing Congress did to the Social Security system when they got their hands on the actual funds and now its in trouble. Again thanks for your help.

    ReplyDelete

Post a Comment

Popular posts from this blog

A Task Assigned to the TVARS Board

The TVARS board is required to recommend a contribution from TVA to be made in fiscal year 2014 prior to the end of the current fiscal year.  (See Section 9B on pages 51-53 of the rules here .)  Since TVA sets its budget months before the end of the fiscal year, it is imperative that this recommended amount be: decided upon by the TVARS board as quickly as possible; sufficient to adequately fund TVARS; and consistent with the amounts charged to ratepayers for pension expense. All seven TVARS board members have an obligation to come together to accomplish this.  (See TVARS board members here .)  I sincerely hope we will be able to accomplish this without further rule changes suspending TVA contributions, or further claims that legitimate accrued benefits are not really vested and must be reduced.  I hope we will be able to put an end to our failure to insure that amounts paid by TVA ratepayers for pension expense are used for their intended purpose.  As a TVARS board member, I
Post a Comment
Read more

Introduction

This is my personal blog to facilitate communication among TVA employees, retirees and beneficiaries who are members of TVARS and who wish to preserve their retirement benefits. Please join my site and post your comments.  I have been an elected member of the TVA Retirement System (TVARS, or the system) board of directors since 2003. I am not speaking officially for the TVARS board of directors or TVA management. TVARS is an entity legally independent of TVA. Three of the board members are TVA employees (including myself), three are appointed by TVA management (currently all TVA executive managers), and the seventh is generally a retired TVA employee (appointed by the other six). As TVA employees, we all have a duty of loyalty to carry out directives issued by TVA management in our regular TVA jobs. However, each board member has a fiduciary duty to all the members of the system when performing TVARS duties. This fiduciary duty legally supercedes our duty of loyalty to carry out direct
21 comments
Read more

Why do TVARS board meetings remain closed?

Within the next couple of months, the TVARS board must vote on a contribution amount to recommend that TVA make in fiscal year 2014. In conjunction with the contribution amount, it is possible the vote will include amendments to the rules. In conjunction with the contribution amount in 2009, the rules were amended to: suspend contribution requirements and related actuarial valuations for four years (Section 9B9); suspend the requirement that part of the contribution go to the “excess COLA account,” which was designed to accumulate and grow funds to be used for payment of future COLAs (Sections 9B9, 10D1 and 10D2); and reduce legitimate accrued pension benefits (Sections 6I, 7L and 18C3). The vote in 2009 was not open to observation, and unless the TVARS board takes action, neither will the vote this year. Not one of the six other TVARS board members would second the motion I made in December to open TVARS meetings to observation. All that is required to open future boa
18 comments
Read more