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Report on Latest TVARS Board Quarterly Meeting

 

The board of directors of the TVA Retirement System (referred to below as either TVARS or System) held its regular quarterly meeting Friday, March 16.

Included in this article are summaries of what was discussed and/or voted on during this meeting following reports by the Investment, Audit, Election and Retirement Committees of the TVARS board. Unless otherwise noted, all votes were unanimous.

Each TVARS board director serves on one or more of these four committees. Committee appointments are made on an annual basis.

Investment Committee

Wilshire Associates, the System's investment consultant, reviewed investment performance for periods ended December 31, 2011. Performance for the quarter was strong with the System earning 4.58%, or approximately $272 million, on its investments. For the 12 month period ended December 31, the System earned slightly less than 1% and for the 3 year period an annualized 12.3%.

The board selected Pacific Investment Management Company, LLC (PIMCO), a current investment manager of the System, to manage an additional 1/2 percent of System assets with the goal of hedging downside risks of the entire TVARS portfolio. This type of strategy is commonly referred to as tail-risk hedging and is expected to reduce volatility long term without sacrificing return through active management. The allocation should serve to mitigate large market losses and provide liquidity in times of market stress.

The board amended the 401(k) Plan Investment Policy Statement to adopt guidelines to be used by the board in the ongoing review of the 401(k) Plan investment options. Based on these guidelines, the board determined that the Fidelity Magellan Fund and the Fidelity International Real Estate Fund will be removed from the 401(k) Plan. Information regarding the effective date of this change and the mapping strategy will be communicated to participants once finalized.

Other topics discussed during the Investment Committee meeting included the following:

  • Investment managers' compliance with their guidelines
  • Due diligence meetings with current and potential investment managers
  • Asset transfers during the quarter
  • Asset allocation policy implementation update
  • Investment manager fees

Audit Committee

The board met with representatives from Crowe Horwath LLP, external auditor for TVARS, to discuss the fiscal year 2011 audit and annual report, which will be released soon. E. H. Johnson & Company, P. C., the System's compliance auditor, provided the board with its Report on Agreed-upon Procedures. These procedures are performed to assist the board in evaluating internal accounting controls and to assist the external auditors in the detailed testing for their audits of the System and the 401(k) Plan.

The TVARS board approved the following policies as part of their overall governance:

  • Confidentiality Policy
  • 401(k) Plan Investment Policy Statement (amended)

These policies will be available on the TVARS website at www.tvars.com and will be in addition to previously approved policies already posted.

Election Committee

The TVARS board selected Allen E. Stokes to serve a second term as its seventh director. Mr. Stokes term was extended to October 31, 2015. Stokes retired in January 2007 after a 30 year career with TVA, having last served as senior manager of Special Projects in Human Resources' Information Services.

Also, the board approved a contract with VR Election Services to conduct the 2012 annual election for the TVARS director position to be filled by an employee. This year's ballots will be mailed to home addresses and to work e-mail addresses (new for 2012). Similar to last year, employees will be able to vote by phone or online. The election is scheduled to be held in August.

Retirement Committee

The Board accepted the September 30, 2011 Statement of Accounting Standards 960 (ASC 960), formally FAS 35, performed by Mercer Human Resource Consulting, the System's actuary. The ASC 960 is the annual valuation of the System's liabilities and is disclosed as part of the footnotes to the audited financial statements in the Annual Report.

Questions

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

Anyone with questions can contact Retirement Management by e-mail at retsvcs@tva.gov or by phone at 865-632-2672, 800-824-3870 (toll-free) or 865-632- 7576 (for the hearing-impaired).

 

 

 

 

 

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