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Amendments Effective October 1, 2016

As indicated in TVA's presentation at the August 25, 2016 TVA Board meeting, TVA did not veto the amendments approved by the TVARS Board on August 8, 2016. The 30-day period in which TVA could have vetoed them has now passed.

Links to Summary Tables of Benefit Changes

Changes for employees who first became TVARS members on or after 01/01/1996 and have less than 10 years of TVARS service as of 10/01/2016

Changes for employees who first became TVARS members on or after 01/01/1996 and have 10 or more years of TVARS service as of 10/01/2016

Changes for employees who first became TVARS members before 01/01/1996 and elected to be in the Cash Balance Benefit Structure

Changes for employees in the Original Benefit Structure

Changes for Retirees

Twenty-Year Limit on TVA's Funding Obligations

For the next twenty years, TVA's annual funding obligation is limited to the larger of $300 million or the normal cost (1) plus an amount that, if paid 30 years in a row, would eliminate the accumulated funding shortfall. I understand that it is now virtually unheard of for any plan to use a period longer than 20 years. Corporate utility plans, TVA's competitors, must use a period of 7 years. The shorter the period, the greater the required contribution. The accumulated funding shortfall was $5.4 billion at the end of the last fiscal year.  

Increased TVA Control of TVARS Board

The rules have been altered so that five board members can now remove one or both of the other two board members. This provision is unheard of in any other independent retirement system today, and TVARS operated successfully without it since its founding many decades ago. It allows TVA to intimidate employee-elected board members. In practice, this provision can only be used to remove a board member TVA wishes to remove. TVA has a lock on the three votes of its appointed members because TVA has the power to remove them at any time. Thus, if TVA wants to remove a board member, it only needs to get the vote of one of the three employee-elected board members. If TVA wishes to retain a board member, it is impossible to get five votes to remove that member.

(1) The normal cost is the annual cost of providing pension benefits for services performed by today's members. 

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