TVARS Recommends $350 Million

On July 14, the TVARS board voted to recommend that TVA contribute $350 million to TVARS in 2015. Jim Hovious and I supported and voted for this recommendation when it became clear to us that the board was likely to recommend a lower amount without our support. Per the outdated formula in the TVARS rules, TVA must contribute at least $215 million in 2015. Changing the minimum contribution formula would require the approval of both the TVARS and TVA boards.

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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...

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 di...

Why isn't the TVARS board protecting TVARS members?

In order to protect TVARS members in the event the federal government divests TVA, the TVARS board can clarify in the TVARS rules that COLAs are vested benefits . (See support from Dennis To here .) Time is very critical now that TVA is working with President Obama’s administration on a financial review of TVA which includes the option of TVA being divested from the federal government. (See here .) TVARS could be terminated upon divestiture. It is very important that the TVARS board take steps to safe-guard benefits before this occurs. If system termination occurs while TVARS remains significantly underfunded, TVARS may never be able to achieve fully funded status. Not one of the six other TVARS board members would second the motion I made in June 2012 to clarify that COLAs are vested benefits. Once again, I would be glad to forward any e-mails from you to the entire TVARS board. Please e-mail them to me at ljmuzyn@tva.gov .

Leonard Muzyn's TVARS Blog

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