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TVARS Counter Offer Falls Short

A big thank you to everyone who wrote in opposition to President & CEO Bill Johnson’s proposal, and for the many suggestions for improvement.  You made a difference.  Many of our ideas were used to improve a counter offer which was passed 4-3 on March 3, 2016.  Though improved, I voted against this counter offer, and I remain firmly opposed to it.  These are some of my reasons:
  • It reduces benefits by approximately $700 million, almost as much as the original proposal.
  • It reduces vested COLA and supplemental benefits which members have earned the right to receive through their service as TVA employees.
  • It fails to bring the minimum TVA required contribution formula into line with best practices for government plans as recommended by our actuary.
  • It gives power to the TVARS Board to remove a board director for violation of policies created by the TVARS Board.

I first saw this counter offer the morning of the vote, though most of the items were previously discussed.  It was not shared with employees and retirees before the vote was called.  It currently exists only as a term sheet, without the detailed rule changes needed to implement it.  I do not know how President & CEO Bill Johnson will react.

These are some of the Improvements that were made to the counter offer:
  • The retention of the cash balance pension “as is” for pre-1996 cash balance employees.
  • The retention of half of a modified cash balance pension for post-1995 cash balance employees with more than 10 years of service.
  • A voluntary option for cash balance participants to switch their future participation to the 401(k) only plan.
  • Subject to IRS approval, a voluntary transfer from the cash balance pension to the 401(k) only plan.
  • A super-majority approval of the TVARS Board needed to change 401(k) plan contribution amounts.
  • A modest increase in TVA’s annual contribution commitment.
  • Removal of a term-limit provision which dictated that elected directors may serve only three terms.

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