TVA President and CEO Bill Johnson will host an employee forum on Friday, Feb. 28, beginning at 10 a.m. ET, in Chattanooga’s Missionary Ridge Auditorium. Employees were invited to submit questions in advance. I submitted the following question:
From: Muzyn, Leonard J Jr
Sent: Wednesday, February 26, 2014 12:19 PM
To: CEO Employee Forum
Subject: TVA Pension
TVA’s pension appears to be the worst funded of any corporate utility in the U.S., and the 4th worst funded of any U.S. corporation. On April 30, 2013, Pensions & Investments (P&I) magazine ranked electric utility Entergy’s pension the 7th worst funded corporate pension in the U.S. TVA was not included in P&I’s rankings. Entergy was “beaten” by Goodyear, Sears, General Dynamics and three airlines. Entergy’s pension had a funded ratio of 63% at the end of 2012, while TVA’s had a funded ratio of only 59%. TVA’s funded ratio was also worse than those of Goodyear, Sears and General Dynamics. Thus, the only three U.S. corporations with a worse funded pension than TVA appear to be three airlines - American, United and Delta.
Inadequate contributions from TVA continue to be the primary cause of TVARS’ poor funded status.
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.
Does TVA plan to increase its contributions to its employees’ pension enough to meaningfully increase its funded ratio as other utilities have done, or is TVA content to have its employees’ pension remain the worst funded of any corporate utility in the U.S.?
Leonard Muzyn
From: Muzyn, Leonard J Jr
Sent: Wednesday, February 26, 2014 12:19 PM
To: CEO Employee Forum
Subject: TVA Pension
TVA’s pension appears to be the worst funded of any corporate utility in the U.S., and the 4th worst funded of any U.S. corporation. On April 30, 2013, Pensions & Investments (P&I) magazine ranked electric utility Entergy’s pension the 7th worst funded corporate pension in the U.S. TVA was not included in P&I’s rankings. Entergy was “beaten” by Goodyear, Sears, General Dynamics and three airlines. Entergy’s pension had a funded ratio of 63% at the end of 2012, while TVA’s had a funded ratio of only 59%. TVA’s funded ratio was also worse than those of Goodyear, Sears and General Dynamics. Thus, the only three U.S. corporations with a worse funded pension than TVA appear to be three airlines - American, United and Delta.
Inadequate contributions from TVA continue to be the primary cause of TVARS’ poor funded status.
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.
Does TVA plan to increase its contributions to its employees’ pension enough to meaningfully increase its funded ratio as other utilities have done, or is TVA content to have its employees’ pension remain the worst funded of any corporate utility in the U.S.?
Leonard Muzyn
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