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TVARS Board Holds Quarterly Meeting

TVA Retirement System board of directors held its quarterly meeting June 19, 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 March 31, 2015. Performance for the quarter was positive (up 2.1 percent) compared to the system policy benchmark of 1.4 percent. For the 12-month period ended March 31, 2015, the system earned 4.4 percent.

System assets, fiscal year-to-date, have earned $300 million with benefit payments of approximately $345 million. The system also received a TVA contribution of $137.5 million at the end of March which represents one half of TVA’s FY 15 contribution. The system’s annualized returns over the past three-, five- and 10-year periods have been 9.5 percent, 9.3 percent and 6.3 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:

  • New 401(k) Plan investment menu (with Aon Hewitt Investment Consulting, the 401(k) Plan Consultant)
  • Private equity advisor
  • Funded status review
  • Currency risk
  • Asset transfers
  • Due diligence meetings with current and potential investment managers
  • Investment manager compliance

Audit Committee

The board approved an engagement letter with Crowe Horwath, the system’s external auditor, to provide FY 2015 financial statement audits for the defined benefit plan and the 401(k) Plan.

E.H. Johnson & Co., the system’s compliance auditor, provided the board with its report on Agreed-upon Procedures for 2014. The procedures assist the board in evaluating internal accounting controls and assist external auditors in the detailed testing for their audits of the system and the 401(k) Plan. The board accepted the report.

Gabriel, Roeder, Smith & Company (GRS) performed an actuarial of the system’s 2013 Actuarial Valuation by Mercer Human Resource Consulting (Mercer), the system’s Actuary and provided the board with an Actuarial Review Report of their examination. Following a discussion of the detailed results and conclusions with representatives from GRS, the board accepted the report. The actuarial audit found no material differences in the valuation results. While the system has financial statement audits annually, an actuarial audit is typically performed every 7-10 years.

The board received an update from its outside counsel, Bradley Arant Boult Cummings LLP, on the current lawsuit against TVA and TVARS.

Retirement Committee

The board accepted the September 30, 2014, Actuarial Valuation of the Variable Annuity Plan performed by Mercer. This valuation is performed annually to review plan experience and recommend any necessary adjustments to the outstanding units in the Variable Annuity Plan.

After discussion and review of the long term funding policy study provided by Mercer, the TVARS board voted 4-3 to recommend TVA contribute $350 million to the system for fiscal year 2016. The funding study shows that a flat contribution of $350 million per year for 20 years would produce a 60%-70% confidence level of being 100% funded over a 20 year period.

Election Committee

As covered earlier in TVA Today, the Retirement System will accept nominations through Monday, July 13, for a three-year term on the TVARS board of directors. The term runs from Nov. 1, 2015, through Oct. 31, 2018. Any active TVARS member is eligible to run for election. Read more.

The TVARS board approved a revision to the Director Election/Selection Policy. This policy, as well as other governance polices are available for review on the TVARS website at www.tvars.com.

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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