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TVARS Board Holds Quarterly Meeting

TVA Retirement System board of directors held its quarterly meeting March 6, hearing 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 Dec. 31, 2014. Performance for the quarter was essentially flat (up 0.1 percent) compared to the system policy benchmark of -0.5 percent. For the 12-month period ended Dec. 31, 2014, the system earned 4.6 percent.
System assets, fiscal year-to-date, have declined by about $160 million after benefit payments of approximately $170 million. The system’s annualized returns over the past three-, five- and 10-year periods have been 11.3 percent, 9.5 percent and 5.9 percent, respectively.
The board discussed with Wilshire Associates preliminary results of an asset liability study, including assumptions and constraints.
Other topics discussed during the Investment Committee meeting:

  • Private asset performance
  • Trade cost analysis
  • Private equity fund update
  • Funded status review
  • Risk allocation review
  • Asset transfers
  • 401(k) Plan performance
  • Due-diligence meetings with current and potential investment managers
  • Investment manager compliance

Audit Committee

E.H. Johnson & Co. reported agreed-upon Procedures for 2014. The procedures assist the board in evaluating internal accounting controls and assist external auditors in the detailed testing for system and 401(k) plan audits.

The board approved a resolution related to system governance and administration, and its fiduciary duty to its members and retirees. The board has worked with Aon Hewitt’s Fiduciary Services practice, focusing on governance responsibilities and best practices in the retirement plan management industry, including public retirement systems. The board directed and authorized its staff to look at alternatives consistent with best practices in retirement system administration that would result in clearer lines of authority and accountability and better alignment of interests and loyalties.

The board also received an update from its outside counsel, Bradley Arant Boult Cummings LLP on the current lawsuit against TVA and TVARS. Final briefs on the lawsuit have been filed. The TVARS response brief and other information regarding the status of the current lawsuit can be found here.

Retirement Committee

The board accepted the Sept. 30, 2014, Actuarial Valuation Report performed by system actuary Mercer Human Resource Consulting. The report is the annual valuation of the system’s liabilities and is part of the required A960 disclosure footnotes to the audited financial statements in the annual report.

The board met with Mercer representatives to discuss long-term funding policy study and mortality assumptions.

Election Committee

The system will hold an employee election for a director position this year. The schedule for the election was approved by the board and will be communicated to employees in TVA Today June 22.

Work Continues on 401(k) Plan investment menu

The board continued its work with Hewitt EnnisKnupp, the 401(k) Plan consultant, on evaluating and implementing an improved menu of 401(k) Plan investment options. The board has agreed on a four-tier investment menu structure:

Tier 1 – Target Date Funds

Tier 2 – Passive Asset Class that includes: U. S. Bond Index, U. S. Large Cap Index, U. S. Market Extension Index (Small-Mid Cap) and Non-U. S. Equity Index

Tier 3 – Active Asset Class that includes: Money Market Fund, Stable Value Fund, Core Fixed Income Fund, Inflation Hedging Fund, Large Cap Value Fund, Large Cap Growth Fund, Small-Mid Cap Value Fund, Small-Mid Cap Growth Fund and International Equity Fund

Tier 4 – Brokerage Window

The smaller and improved investment menu with much lower investment fees is anticipated to occur by Jan, 1, 2016. Participants will have ample time to review and make any decisions regarding these changes once the revised menu is approved and communicated.

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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