Leonard Muzyn's TVARS Blog

The TVARS Board approved the following 2017 benefit reductions on December 8, 2016 in order to comply with the rule amendments passed 4-3 by the TVARS Board in a special-called meeting on August 8, 2016.  See the transcript of the special-called meeting here . 17% reduction of the annual compounding rate in the cash balance pension formula (6% reduced to 5% for employees first hired on or after 1/1/96) 1.24% supplemental benefit 2017 COLA, as well as all future supplemental benefit COLAs, eliminated for most retirees Reduced maximum supplemental benefit to apply to all current and future retirees 1.24% pension COLA reduced to 0.99% for retirees 6% fixed fund interest rate during employment reduced to 5% for employees who have balances based on their own contributions in the fixed fund In contrast to reduced retirement benefits for TVA employees and retirees, on December 12, 2016 the TVA Board gave TVA's CEO a golden parachute.  If President-Elect Trump appo...

 INTRODUCTION In the words of the Sixth Circuit, “TVARS has an obligation to look out for the interests of plan participants . . . .” At a minimum, TVARS must follow its own Rules. That did not happen between 2009 and 2013. The TVARS Board passed amendments that slashed hundreds of millions of dollars of COLA and interest benefits. The Board failed to give proper notice of the amendments and disobeyed the Rules that protected such benefits. The Board then took hundreds of millions of dollars out of the Excess COLA Account, a fund set aside to pay for COLAs in the future. The amounts taken far exceeded the limits in the Rules. The Court should grant summary judgment to Plaintiffs and enforce the Rules. It makes a difference to tens of thousands of employees and retirees. Not even federal agencies can ignore the law for cost savings or expediency. 259-0. 12-02-2016 Plaintiffs' Reply in Support of Motion for Summary Judgment.pdf 259-1. 12-02-2016 Appendix of Unreported ...

Both the 2009 Amendments and the debits to the Excess COLA Account violated the Rules. TVA’s arguments ignore critical language in the Rules and persuasive authority from the Sixth Circuit. The material facts are undisputed, and Plaintiffs are entitled to judgment as a matter of law. First, the TVARS Board violated Rules § 13 by not giving “at least 30 days’ notice of the proposed amendment” to plan participants. TVARS waited to give notice until after it took the final vote. At that point, the 2009 Amendments were no longer merely “proposed,” and plan participants did not have a chance to petition the Board. Second, the 2009 Amendments reduced benefits in violation of Rules § 13 in two separate ways. The COLAs at issue were already “covered by accumulated reserves held therefor,” the Excess COLA Account. The interest rate credited to existing balances in the Annuity Savings Account was a “nonforfeitable” or vested benefit. Third, the TVARS Board violated Rules §§ 9.B.6 an...

In the recent election for a director vacancy on the TVA Retirement System Board, employees voted to re-elect James W. Hovious.  His new three-year term will run from Nov. 1, 2016, to Oct. 31, 2019.   Of the 2,975 votes cast, Hovious received 2,197 (73.85 percent). Jennifer Weber received 778 votes (26.15 percent). Click here to see Jim Hovious’ candidate information.

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, ...

From Thursday's TVA Board meeting: A 50/50 chance TVA pension is properly funded in 20 years. Click here to see all the slides concerning TVARS presented at the Thursday August 25, 2016 TVA Board meeting. 

Announcement of Candidates Employees who are TVARS members will elect a director from the two candidates listed below for a three-year term on the TVARS Board. The term will run from November 1, 2016, through October 31, 2019. James W. Hovious – Systems Engineer, Generators, Power Operations, Chattanooga Jennifer R. Weber – Senior Program Manager, FERC Compliance & Regulation, Transmission & Power Supply, Chattanooga Click on the names above to view detailed candidate information. Everyone Counts, Inc., an independent election firm, will handle the voting process this year.  Election ballots and instructions will be mailed to employees’ home addresses, and employees will also receive voting information at work by e-mail directly from Everyone Counts. The election will be open from August 29-September 14 (24 hours a day, 7 days a week). The election will close on September 14 at 4:45 EDT. Employees will be able to vote by phone or online. For customer service d...

Click here to see the decision.

On August 8, 2016, the TVARS board passed by a 4-3 vote the actual amendments to the rules implementing the changes the board approved by the same 4-3 vote on May 9, 2016.  They will take effect in 30 days if not vetoed by TVA.  I stated the following during the meeting: I will vote against these amendments.  I believe that all TVARS Board members have a duty to place the interests of TVARS, an independent government entity established in 1939 with the full support of previous TVA managements, above those of current TVA management. These amendments will dramatically increase TVARS’ financial risk. TVARS now has just half of the funds it needs to meet its obligations to TVA employees.  These amendments do not provide a commitment from TVA to improve the funded status.  Instead, they reduce the minimum amount TVA is required to fund over the next twenty years to levels well below those required by law of other utilities.  TVARS will be subsidizing T...

The TVARS Board has yet to meet to discuss and approve the actual rules to implement the pension changes. I suspect TVA is dragging their feet as long as they can because they might want something different if the appeals court rules before the end of August. TVARS must give 30 days’ notice before the new rules take effect October 1, and I do not believe that can be done until the actual rules are finalized. I believe it is likely that Allen Stokes, Suzan Bowman, et al. will go along and rubber stamp any change requests that TVA might make. All COLAs are now in jeopardy. TVA is trying to use the TVARS approved changes as evidence that COLAs are not vested benefits. That is very clear from TVA's last filing with the court.

Revised and updated on June 23, 2016 Please click here to download the appellate courtroom audio of “15-6019 Charles T Evans vs Tennessee Valley Authority Retirement System TVA” from June 14, 2016.  The attorney for the plaintiffs speaks first, followed by the attorney for TVARS, followed by the attorney with TVA’s OGC.  The appellate court judges seemed very interested and asked many questions.  The oral arguments lasted over twice as long as scheduled.  All sides seemed to agree that the district court erred in finding that TVA retirees and employees did not have the right of judicial review.  I was very impressed with plaintiffs’ attorney Michael Wall who spoke first and made some clarifications at the end.  I believe he did an excellent job answering the judges questions and citing case law to support his arguments.  He also seemed to have a real mastery of the TVARS rules. TVA’s OGC attorney Edward Meade speaks about the “apparently inco...

I voted against the amendments scheduled to take effect on October 1, 2016 because they reduce earned benefits the board has determined are vested.  They also authorize TVA to inadequately fund the remaining benefits for the next 20 years.  They reduce benefits by about $700 million.  Even after this reduction, actuarial projections indicate that the 20-year funding requirements will not be enough to fully pay the remaining benefits.  In addition, these amendments transfer significant stock market risk to the plan’s beneficiaries while giving the board the authority to suspend TVA’s contributions to the plan for any reason. TVA will still be able to terminate the plan at any time. TVA’s agreeing that the remaining COLAs are vested gives the beneficiaries nothing because the rules clearly state that the retirement board determines what benefits are to be paid.  The board has already determined and informed the court hearing the pending lawsuit that COLAs are...

Benefits Changes Not Significant for Retirees By SUZAN BOWMAN, TVARA Valleywide President [Leonard Muzyn’s comments are in brackets.] What a wild ride 2016 has been so far! As I write this, we were just notified that the TVA Retirement System Board voted to accept TVA’s latest proposal on changes in retirement benefits (see article on this page). The actual wording of the amendments had not been finalized at this time. [Am I the only person concerned that a vote was taken before the actual wording was available?] Overall, the changes are not going to have significant impact on TVA retirees. [An average loss of almost $10,000 per retiree is not significant? Maybe it’s all relative. Some retirees do receive very large pensions and this proposal did hit future retirees, or current employees, harder.] You should not see any changes in your current check amounts. [A reduction in next year’s increase may feel OK now because it is a year away, but it is still a reduction.] More go...

Our actuary expressed five key concerns with the funding policy in TVA’s April 18, 2016 proposal.  These concerns were included in a written report to TVARS and are applicable to what the board approved in the May 9, 2016 meeting.  Board members owe a fiduciary duty to the beneficiaries of the system to act in their best interest independent of TVA.  Therefore, as a TVARS board member, I had no choice but to vote against this proposal.  This proposal may help TVA executives meet their goals and receive larger bonuses, but it exposes beneficiaries to these five very serious concerns.  I am ashamed to be associated with this board whose majority so clearly demonstrates that they place their own career advancements and financial securities above the duties required of them as members of this board.  This is a summary of the five key concerns expressed by our actuary about the proposal: It is not clear if participants or TVA are bearing the investment risk i...

Brian Child called for a vote on the first page of Bill Johnson’s latest letter.  It is not clear to me what the total changes are that the TVARS board has approved.  It did not seem to matter exactly what we were voting on.  Allen Stokes, Brian Child, Tammy Wilson and John Hoskins voted to approve whatever it was.  So much for an independent, collaborative and methodical TVARS board.  I’ve been involved in negotiations before and this had nothing to do with negotiating.  Like you, I will wait and see what spin TVA puts on it and try to figure out exactly what it means. From: Leonard Muzyn Date: Thursday, May 5, 2016 at 6:39 PM To: "tvarsmuzyn@gmail.com" Subject: TVARS Meeting Monday May 9 A TVARS Board special meeting teleconference is scheduled for Monday May 9th at 2:00 p.m. EDT.  Tammy Wilson, Brian Child, and John Hoskins have called for this special meeting to discuss the response from the TVARS Board to TVA’s counterproposal.  A spec...

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 previousl...

Update:  Due to your support, TVA and a majority of the TVARS Board did not include this item in subsequent proposals.  Thank you very much!  I will likely be removed from the TVARS Board this week.  TVA’s proposed changes to the rules state that “elected directors may serve only three terms.”  I am currently serving my fifth term as an elected director.  Tony Troyani and Allen Stokes continue to work with John Hoskins, Brian Child and Tammy Wilson to push for a TVARS Board vote on TVA’s or a similar alternative proposal.  They may wait to vote until the quarterly board meeting in Nashville this coming Thursday, March 3. Suzan Bowman is also supporting my removal from the TVARS Board.  When Tony Troyani asked if the TVARA had a proposal to submit to the TVARS Board, she responded in a February 19, 2016 e-mail with two alternatives which included reductions in vested benefits and stated “We also support 3 year [sic] Term limits for Board mem...

Jim Hovious and I outlined a TVARS proposal in a letter to TVA’s Trades and Labor Council on February 1, 2016.  Please see letter here .  A key element of our proposal, a suggested revision of the minimum contribution formula, appears to be falling into place.  A compromise minimum contribution formula has been found which produces an average 20-year minimum required annual contribution of about $350 million.  The compromise formula produces a contribution somewhat lower than would be required under ERISA, yet somewhat higher than would be required under government pension rules.  The formula provides funding for all current benefits without the need for any benefit reductions. (Note 1) Our proposal seeks no reductions in vested benefits, so its implementation would be unlikely to jeopardize member interests in the current lawsuit. (Note 2)  It does not include governance changes which would diminish TVARS’ independence and member influence, such as TV...

I believe that any compromise involving a reduction of the COLAs applied to the TVARS pension and supplemental pension benefit would assure their eventual elimination.  Please allow me to explain. TVA's lawyers argued in the lawsuit that the TVARS board must think that TVARS COLAs are not vested because we voted to reduce them in 2009.  In March of 2015, the TVARS board filed documents with the court explaining that we did not have time to consider the vesting issue before the vote in 2009.  We also did not have independent legal counsel.  We explained that after we examined the arguments in the court documents filed by TVA and the plaintiffs, and discussed the vesting issue with independent legal counsel, we determined that the COLAs were and are vested benefits.  We explained that we should not have reduced them in 2009.  This brings up two points: If the TVARS board votes to reduce COLAs again, TVA's lawyers could make the same argument, an...

Tennessee Valley Authority Retirees Coalition NEWS RELEASE FOR IMMEDIATE RELEASE For Information Contact: Mike Moseley Bowling Green, KY 931-216-3091 mmoseley1617@gmail.com TVA Retirees Join Forces with National Network Tennessee Valley Authority Retirees Coalition Cites $6 billion shortfall in TVA Pension Plan for Retirees and Employees BOWLING GREEN, KY. (Feb. 9, 2016) – In response to TVA’s under-funding of its employee pension for over a decade, a group of TVA retirees have formed the Tennessee Valley Authority Retirees Coalition (TVARC). TVARC has now joined forces with the National Retiree Legislative Network (NRLN) to seek Congressional assistance in bringing the employee pension back to a safely funded level. At the end of FY 2015, TVA’s employee pension was only 53 percent funded with liabilities of $12.8 billion and assets of $6.8 billion, leaving the pension underfunded by $6 billion. TVA’s employee pension covers 35,000 retirees and employees,...

February 1, 2016 Mr. Kerry D. Hale President Trades and Labor Council for      Annual Employees of TVA 5726 Marlin Road, Suite 500 Chattanooga, Tennessee  37411 Dear President Hale: Thank you for copying us on your January 26, 2016 letter to Mr. Bill Johnson, President and Chief Executive Officer of the Tennessee Valley Authority.  We are honored to serve on the TVARS Board with the strong support of TVA’s Trades and Labor employees.  Each of us received a majority of the Trades and Labor votes cast in our last elections.  We are the only TVARS Board members who can make this claim.  We are working very hard to ensure that all TVARS members and beneficiaries are treated fairly, including TVA’s Trades and Labor employees and retirees.   We would like to take this opportunity to provide you with some additional information and request your support for our alternative proposal which will not reduce the benefits of rank-and-file work...

From: Muzyn, Leonard J Jr [mailto:ljmuzyn@tva.gov] Sent: Monday, January 11, 2016 10:59 AM To: Troyani, Anthony L Jr ; Stokes, Allen E ; Wilson, Tammy W ; Hoskins, John M ; Child, Brian M Cc: Hovious, James W ; Leonard Muzyn (home) Subject: Why you should not vote for Bill Johnson's Proposal Tony, Allen, Tammy, John and Brian, I want to make it very clear that I will not vote for Bill Johnson’s proposal and that I am doing everything I can to convince you to vote against it.  I believe my fiduciary duty requires me to do this.  Please see some of my reasons below.  I gave a two hour presentation to the TVARA Board in Nashville last Wednesday asking the TVARA Board to recommend a vote against Bill Johnson’s proposal.  Jim Hovious agreed and also participated in this meeting.  I have attached that presentation.  I am not copying any lawyers on this e-mail because I want to make sure this e-mail is discoverable when the inevitable lawsuits fo...

TVA has asked the TVARS Board to vote this month on a proposal to permanently reduce pension benefits: prior to a ruling from the Sixth Circuit Court of Appeals on the 2009 benefit reductions in a way the TVARS Board has already determined is in violation of TVARS rules and regulations in a way that would be illegal if TVA's pension plan was covered by laws that other pension plans must follow which could lead to lawsuits from system beneficiaries against each individual TVARS Board member who votes to approve the proposal with the vote on the proposal highly likely to be in TVA's favor given TVA's de facto control over the TVARS Board with TVA asking for retiree and employee feedback without agreeing to make all of it public, enabling it to be selectively divulged or ignored I gave a presentation to the Board of the Tennessee Valley Authority Retirees' Association on January 6, 2016 in Nashville, TN explaining many of these items in further detail.  Please v...