Leonard Muzyn's TVARS Blog

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. c

It is important to keep the following in mind when evaluating the magnitude of the under-funded status of TVA's pension: Using funded ratios from TVA’s 10-K statements is appropriate when comparing TVA’s pension to those of other utilities.  See TVA’s 2013 10-K here .  TVA’s 10-K statements show that 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.  They show that TVA’s pension had a funded ratio of 59% at the end of fiscal year 2012, and 63% at the end of 2013.  TVA’s pension was $5.0 billion underfunded at the end of fiscal year 2012.  TVA’s pension was still $4.3 billion underfunded at the end of fiscal year 2013, even after a year of very good investment returns.  TVA’s OIG understands that numbers from the 10-K reports are the proper numbers to use in comparisons, and did so in their 2010 report on TVA’s pension risk.  See the OIG report here .  Using funded ratios from TVARS annual repo

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. See here . 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. Note: TVA reports on a fiscal year basis with year ending September 30, while most other corporations report on a calendar year basis.

Inadequate contributions from TVA continue to be the primary cause of TVARS’ poor funded status. TVA’s contributions to TVARS have not kept pace with TVA’s pension expense. They have also not kept pace with TVA’s contributions on behalf of TVA employees covered by the Federal Employee Retirement System (FERS), including TVA Board members. 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 p

Message on Fidelity NetBenefits website for TVA 401K participants: Due to unforeseen circumstances, the Share Class changes scheduled for December 4, 2013, were delayed. The new date of the Share Class changes is scheduled for February 18, 2014. If you would like to review the upcoming changes, please reference the letter posted on NetBenefits® under Plan Information and Documents named, “Share Class Changes.” The changes were expected to occur on February 5, 2014 after the first delay (see here ), but they have been delayed again until February 18, 2014. I apologize for the delays.

TVARS plans to offer retirees on-line access to monthly pay summaries and form 1099-R next year.  Our January payroll was recently converted as part of the PLUS project, and this will eventually allow us to offer these types of on-line services.  As these features become available, TVARS will work with the TVARA and others to communicate.

Fact discovery has been extended 90 days from February 14, 2014 to May 15, 2014. See court order here .