Leonard Muzyn's TVARS Blog

The term of Allen Stokes, a TVA retiree and the current 7th Board member, ends October 31, 2015.  The 7th member is appointed by the other six per the retirement system rules.  Allen has served as 7th member for four years.  Allen has submitted his name for consideration for another term.  Last I heard, his is the only name that has been submitted.  If any other names are submitted, I will keep an open mind and be happy to participate with the other five board members when we conduct the interview process. At this time though, in response to many of your questions, I want to let you know that I have been impressed with Allen’s performance and leadership as 7th member and Chairman of the TVARS Board.  Allen’s positions are always well thought out.  He takes his responsibility to TVA retirees and employees very seriously.  If Allen is reappointed as the 7th Board member, I believe the TVARS Board would be in a very good position to follow throu...

The TVARS board filed documents with the court yesterday requesting that the Court grant Plaintiffs' Motion as to the vesting of COLAs.  The TVARS Board stated in the filing that the 2009 Amendments to the TVARS Rules reduced vested COLA benefits .  The TVARS Board stated that the Rules are ambiguous, but that the Rules' language and extrinsic evidence both show that all COLAs were and are vested benefits .  The TVARS Board also requested that the Court schedule a Conference to determine remedies if the Court grants Plaintiffs' Motion as to the vesting of COLAs. See TVARS' Response to the two Motions for Summary Judgment filed by the Plaintiffs and TVA  here .  See TVARS' Statement of Additional Relevant Facts here . See the Declaration of Patrick D. Brackett here .  See TVARS' Response to TVA's Statement of Undisputed Material Facts here .  See TVARS' Response to Plaintiffs' Statement of Undisputed Material Facts here . If the Court agrees that ...

It's all about the lack of contributions from TVA. The investment performance has been above average over most time frames we measured. Unfortunately, the chart probably makes TVA look better than it really was compared to the others in 2014 because it is on a fiscal year.  Interest rates were significantly higher at the end of fiscal year 2014 than they were at the end of calendar year 2014.

In 2014, TVA funded 100% of its executive pension cost, but less than 50% of its non-executive pension cost. Per TVA’s 2014 10K financial statement : Supplemental Executive Retirement Plan. TVA has established a SERP for certain executives in critical positions to provide supplemental pension benefits tied to compensation that exceeds limits imposed by IRS rules applicable to the qualified defined benefit pension plan. TVA has historically funded the annual calculated expense  (p. 124) TVA contributed $256 million of $517 million in total pension cost, including the executive pension, charged to ratepayers in 2014. (pp. 126, 128)

TVA pension shortfall reaches $4.8B Ed Marcum U.S. Rep. John J. Duncan Jr. has asked the Government Accountability Office to look into TVA’s pension program after utility employees demanded TVA pour money into the fund. Click here to see entire article.

Are you confused by statements made in TVARA meetings that TVA's pension is 79% funded when you see in TVA's annual report that TVA's pension is only 61% funded, much worse than many comparable electric utilities? There are two different accounting standards at play here. Accounting standards used by TVA indicate a 61% funded ratio as of 9/30/14. Accounting standards used in the TVARS annual report indicate a 79% funded ratio as of 9/30/13, the latest information available. Liabilities in the TVARS annual report are discounted at the long-term expected return of the system assets, as they are in reports of public government pensions. William F. Sharpe, one of the recipients of the Nobel Prize in Economics for introducing the capital asset pricing model (CAPM), provided his thinking on pensions and accounting standards in a recently published article in the November/December 2014 Financial Analysts Journal: Are public pensions a problem? You bet. Is this a disaster?...

By  Dave Flessner Friday, December 5, 2014 Employees and retirees of the Tennessee Valley Authority have mounted an online petition campaign to try to convince the federal utility to replenish its underfunded pension program. In their appeal to Congress and the TVA board, petitioners are urging TVA to put more money into the TVA Retirement System, which actuaries estimate has promised $4.8 billion more in benefits than what the fund now has in reserves. Robert Stalvey of Spring City, one of nearly 400 persons who have signed the petition since it began on Monday through the online platform change.com, is worried about his TVA pension. “TVA board members are robbing the funds collected from the rate payers for the pension plan for other funding,” Stalvey complained on the social media site. “This is the same as stealing and should be stopped.” The TVA retirement plan, which covers nearly 36,000 employees, retirees and family members, had assets of $7.5 billion as of Sept. 3...