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TVARS Board Holds Quarterly Meeting

TVA Retirement System board of directors held its regular, quarterly meeting on Thursday, December 10, 2015. The board heard reports from the Investment, Audit, Election and Retirement committees.

Each TVARS board director serves on one or more of the four committees. Committee appointments are made on an annual basis. Unless otherwise noted, all decisions were unanimous.

Investment Committee

Wilshire Associates, the system’s investment consultant, reviewed investment performance for the period ended September 30, 2015. Performance for the quarter was negative (down - 6.2 percent) compared to the system policy benchmark of -6.1 percent. For the 12-month period ended September 30, 2015, the system was down -4.2 percent.

System assets, fiscal year-to-date, have declined approximately $685 million with benefit payments of approximately $690 million. The system’s annualized returns over the past three-, five- and 10-year periods have been 5.7 percent, 7.0 percent and 4.9 percent, respectively.

The Board reviewed the results of a new private market funding plan, including cash flows and liquidity constraints, with Wilshire Associates and voted to commit $300 million to the asset class for fiscal year 2016.

Other topics discussed during the Investment Committee meeting:

  • Investment Policy Statement amendments
  • Wilshire Associates - Investment consulting contract renewal
  • Huff Alternative Fund one year extension
  • Selection of new TVARS Board advisor – Vince Sands
  • 401(k) Plan performance review
  • Capital market assumptions review
  • Securities lending
  • Master Trustee request for proposal
  • Funded status review
  • Asset transfers
  • Due diligence meetings with current and potential investment managers
  • Investment manager compliance

Audit Committee

The Board reviewed the annual audit assessing controls related to system operations, performed by Crowe Horwath, LLP, for the period from Aug. 1, 2014, to July 31, 2015 (SSAE 16 audit report). The report resulted in no findings and was accepted by the board.

Also, the Board voted to approve an engagement letter with Crowe Horwath LLP to perform the System’s SSAE 16 audit report for the period August 1, 2015 to July 31, 2016.

Election Committee

The Election committee had no items on the agenda.

Retirement Committee

The board approved no cost-of-living adjustment (COLA) for retirees for calendar year 2016.

The COLA is calculated by comparing the percentage change in the U.S. Labor Department’s Consumer Price Index for All Urban Consumers (CPI-U) from the 12-month period ended Oct. 31, 2014, to the 12-month period ended Oct. 31, 2015. Because the average CPI-U increased by 0.19%, which is less than 1%, no COLA will be made for 2016. A COLA will be made when the cumulative percentage increase in the average CPI-U since the last adjustment exceeds 1% and will reflect the full increase since the time of the last adjustment.

The board established the annual interest rate to be applied to the Cash Balance pay credits for members of the Cash Balance Benefit Structure. TVARS rules provide for the interest rate to be the change in the CPI-U plus 3 percent, with a minimum rate of 6 percent. Based on the change in the CPI-U stated above, the interest rate will remain at the minimum of 6 percent for Cash Balance participants in 2016.

New committee appointments for 2016 were also made and are available on the TVARS website at www.tvars.com.

As a result of the Board’s previous action adopting new mortality tables for System liability valuation and minimum contribution requirements, upon the recommendation of the Retirement Committee, the Board approved the amendments to the Actuarial Assumptions in the Appendix to the Rules and Regulations of the System.

Questions

Anyone with questions should contact Retirement Management by e-mail at retsvcs@tva.gov or by phone at 865-632-2672, or 800-824-3870 (toll-free).

 

 

 

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