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TVARS Board Approves Pension Funding Unfairly Subsidizing TVA

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 TVA, giving it an unfair advantage over competing utilities bound by ERISA pension law.  I can understand why current TVA management may find this desirable.  I do not understand why any TVARS board member finds this desirable.
  • I made a motion to table this vote until TVA employees and retirees are able to review them and provide comments.  Four members of the TVARS board already gave these amendments to TVA, and several of TVA’s comments have already been incorporated.  If the board wanted to do what is in the best interests of the retirement system instead of simply taking directives from current TVA management, I believe the board would have passed my motion to table.  The board did not pass my motion to table.

Click here to see the actual amendments.

Comments

  1. UnknownAugust 8, 2016 at 6:41 PM

    Leonard, you always make so much sense. Many times while working I had to deal with some outside comments about being lower cost because TVA was subsidized, but we were not. But you identify where TVA is not operating in the same market for labor (ERISA) and funding. We had an advantage in the reputation of our retirement structure. Thanks Leonard.

    ReplyDelete
  2. UnknownAugust 9, 2016 at 7:23 AM

    It appears that a majority of the TVARS board are merely an extension of TVA management. Thanks for all of your efforts to stall or stop this attempt to deliver retirees a devastating blow.

    ReplyDelete

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