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TVARS Board Agrees: COLAs are Vested Benefits

The TVARS board filed documents with the court yesterday requesting that the Court grant Plaintiffs' Motion as to the vesting of COLAs.  The TVARS Board stated in the filing that the 2009 Amendments to the TVARS Rules reduced vested COLA benefits.  The TVARS Board stated that the Rules are ambiguous, but that the Rules' language and extrinsic evidence both show that all COLAs were and are vested benefits.  The TVARS Board also requested that the Court schedule a Conference to determine remedies if the Court grants Plaintiffs' Motion as to the vesting of COLAs.

See TVARS' Response to the two Motions for Summary Judgment filed by the Plaintiffs and TVA here.  See TVARS' Statement of Additional Relevant Facts here. See the Declaration of Patrick D. Brackett here.  See TVARS' Response to TVA's Statement of Undisputed Material Facts here.  See TVARS' Response to Plaintiffs' Statement of Undisputed Material Facts here.

If the Court agrees that COLAs are vested, TVA would be much less likely to terminate our system.  Per Section 11B of the Rules, TVA is required to fund all vested benefits if our system is terminated. If TVA is directed by the Court to treat all COLAs as vested benefits, it would cost TVA at least an additional $1 billion to $2 billion more to terminate our system than under TVA's currently stated assumptions.

Below are some relevant excerpts from Section 11B of the Rules:

SECTION 11
B. Vested (Nonforfeitable) Benefits and Segregation of Funds

4. Upon any such discontinuance or reduction of TVA's contributions, steps shall be taken as described below:
a. Funds of the System sufficient to provide nonforfeitable benefits shall be segregated in the System's accounts…

b. In determining what amount is sufficient to provide such benefits, the board shall proceed on the basis of assumption approved by it following recommendations with respect thereto by the actuary, to the end that fully adequate funding (with such margins as the board considers appropriate) shall be provided for such nonforfeitable benefits, but that the balance available for disposition pursuant to section 11B2 or 11C2 shall not be unduly reduced thereby. In approving assumptions in this connection, the board shall give consideration to, among other factors, whether the System is being continued or terminated and whether and on what basis benefits will be available from another pension or benefit scheme of the Federal Government in lieu of those which would have been payable under the System had TVA not discontinued or reduced its contributions as aforesaid.

d. Notwithstanding any other provision of these Rules and Regulations, TVA will from time to time make such additional contributions when and as may be determined to be actuarially necessary to make up any insufficiency in the funds segregated pursuant to section 11B4a for the purpose described therein; provided, however, that if TVA determines that the insufficiency at the time of such discontinuance or reduction in TVA's contributions is too great to be funded immediately, TVA shall fund it through additional contributions over a reasonable period of time.

Comments

  1. Leonard, I think that was the best email I have received this year. Thank you for being such a great advocate for retirees. I don't think this would have come about except for your efforts. This should help our case greatly in the courts.

    ReplyDelete
  2. Leonard, Thanks for your efforts on behalf of retirees. Would to God the rest of the Board members would put forth the effort that you have.

    ReplyDelete

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