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TVARS Board Holds Quarterly Meeting

TVA Retirement System board of directors held its regular, quarterly meeting Friday, Dec. 5.

The board heard reports from the Investment, Audit, Election and Retirement committees.

Investment Committee

Wilshire Associates, the system’s investment consultant, reviewed investment performance for the period ended Sept. 30, 2014. Performance for the quarter was negative, with the system returning -1.8 percent on investments. For fiscal year 2014 (the 12-month period ended Sept. 30), the system earned 10.0 percent.

System assets for fiscal year 2014 earned approximately $650 million. Benefit payments for fiscal year 2014 totaled approximately $650 million. The system’s annualized returns over the past three-, five- and 10-year periods have been 12.9 percent, 10.3 percent and 6.8 percent, respectively.

With the review and recommendation of Wilshire Associates, the board approved equity investments using low-volatility strategies with Acadian Asset Management and Los Angeles Capital Management.

Other topics discussed during the Investment Committee meeting:

  • Private equity investments and benchmarking
  • Fixed income quality and benchmarking
  • Investment fee benchmarking
  • Asset allocation review
  • Funded status review
  • Risk allocation review
  • Asset transfers
  • 01(k) Plan fund performance
  • 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 for the period from Aug. 1, 2013, to July 31, 2014 (SSAE 16 audit report). The report resulted in no findings and was accepted by the board.

The board also received an update from Crowe Horwath LLP, external auditor for TVARS, regarding the current audit of financial statements for fiscal year 2014.

The TVARS board reviewed and voted 5-2 to approve a contract with Hewitt EnnisKnupp Inc. to continue to provide the TVARS board consulting services related to governance matters.

Also, the board voted to purchase $10 million in fiduciary liability insurance for one year with AIG for the TVARS board and staff.

Retirement Committee

The board approved a 1.68 percent cost-of-living adjustment (COLA) for eligible retirees for calendar year 2015.

Retirees will see the increase in checks beginning Jan. 31, 2015.

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, 2013, to the 12-month period ended Oct. 31, 2014.

The board also 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 above COLA of 1.68 percent, the interest rate will remain at the minimum of 6 percent for Cash Balance participants in 2015.

Chair, vice-chair elected

During the meeting, Allen Stokes was elected chair of the TVARS board and Tony Troyani was elected vice-chair.

Standing committees were also approved and are available on the TVARS website. 2015 to bring 401(k) Plan investment option enhancements

The board has been working with Hewitt EnnisKnupp, the 401(k) Plan consultant, on evaluating and implementing a potential improved menu of 401(k) Plan investment options.

While still in the planning stages, the board anticipates implementing a smaller and improved investment menu with lower investment fees in 2015.

While the exact timeframe for the new menu of 401(K) Plan investment options has not been finalized, it is anticipated by the end of 2015. Participants will have ample time to review and make any decisions regarding these changes once they are determined and communicated.

Questions

The TVARS board is committed to providing accurate and timely information to employees and retirees.

 

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

 

 

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