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TVA Retirement System Financial Reform Efforts Continue

TVA Retirement System (TVARS) Board members Jim Hovious and I continue working towards the reform needed to secure the stable financial futures of both TVA and TVARS.  We are again urging the TVARS Board to approve an amendment to the rules which will ensure the pension plan achieves full funding.

We are now supported in our efforts by the recommendations of the March 2017 GAO Report to Congress on TVA.  Our proposed amendment would eliminate the funding shortfall in 20 years.  Per the GAO's report, 15 to 20 years is the maximum period recommended by a Blue Ribbon Panel commissioned by the Society of Actuaries.  The GAO report indicates that TVA officials have stated a goal to fully fund the pension within 20 years, but that TVA has not identified such a goal or milestones in its performance plan or report.  In contrast to TVA's stated goal, TVA officials told the GAO that TVA does not plan to contribute more than the TVARS Rules require.  This will essentially pass today's pension obligations down to future ratepayers.  Current TVARS Rules require the use of a rolling 30-year period. This is analogous to refinancing your house with a new 30 year mortgage every year so that you never have to pay off the loan.

We have requested that a discussion of the GAO report and our proposed amendment be placed on the agenda of the upcoming June 15 quarterly TVARS Board meeting.

Our proposed amendment:  
Whereas the TVARS Board wishes to amend its rules and regulations to meet the funding recommendations in the March 2017 GAO Report to Congress, the TVARS Board hereby approves amending the system’s rules and regulations to specify that the annual “accrued liability contribution” be determined using a fixed amortization period of 20 years beginning in fiscal year 2018 instead of the currently specified 30-year rolling amortization period.

Comments

  1. AnonymousMay 24, 2017 at 6:25 PM

    You screwed me out of my pension. Well it's yours up for grabs now.

    ReplyDelete
    Replies
    1. Leonard J. Muzyn, Jr., CFAMay 24, 2017 at 6:38 PM

      Jim and I did everything we could to improve the system's funding and stop the 2016 amendments. Unfortunately, a majority of the TVARS Board over-ruled us.

      Delete
  2. UnknownMay 27, 2017 at 5:00 PM

    Leonard, I appreciate what you and Jim are doing. It's unfortunate that many of our system members sit quietly and then when something doesn't go their way look for someone to wrongly blame. Keep up the good work.
    Jim G

    ReplyDelete

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