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Report on 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 Thursday, Sept. 12.

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.

On Sept. 12, Bradley Arant Boult Cummings, outside legal counsel representing the System in the current lawsuit against TVA and the System, discussed with the board issues regarding the lawsuit.

Investment Committee

Wilshire Associates, the System’s investment consultant, reviewed investment performance for periods ended June 30, 2013. Performance for the quarter was slightly negative with the System returning -0.3 percent on its investments. For the 12-month period ended June 30, the System earned 12.2 percent and ranked in the 29th percentile among the 810 plans in Wilshire’s Total Fund Universe. The System’s annualized returns over the last 3 and 10 years have been 11.1 percent and 7.0 percent respectively. This performance ranks in the 28th and 26th percentile among other institutional funds followed by Wilshire.

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

  • Asset allocation policy
  • 401(k) Plan fund performance and fees
  • Dynamic risk rebalancing
  • Counterparty risk
  • Trade cost analysis
  • Risk allocation review
  • Funded status review

Audit Committee

The TVARS board reviewed and approved contracts with E.H. Johnson and Company, P.C., the System’s internal auditor. These contracts authorize services relating to the Agreed upon Procedures and Service Organization Controls (SOC 1) audits. The Agreed upon Procedures Report covers certain testing procedures requested by TVARS which will assist Crowe Horwath, the System’s external auditor, with the TVARS annual year-end audit. The SOC 1 audit covers TVARS internal controls over financial reporting, and will be provided to TVA.

The TVARS board reviewed a Succession Planning Policy as part of their overall governance. Once approved, this policy will be available on the TVARS website at www.tvars.com and will be in addition to previously approved policies already posted.

Other topics discussed during the Audit Committee meeting included the process to issue a request for proposal for the SOC 1 Report.

Election Committee

The results of the election between Felicia C. Blackwell, James W. Hovious and David W. Schultz were accepted by the TVARS board. As previously communicated in TVA Today, James W. Hovious was elected to serve a new three-year term that will begin Nov. 1, 2013, and end Oct. 31, 2016. This year’s election was conducted again by VR Election Services. Over 40 percent of eligible voters participated in this year’s election with 90 percent of the votes by Internet.

Retirement Committee

The board accepted the March 31, 2013 Actuarial Valuation of the Variable Annuity Plan performed by Mercer Human Resource Consulting (Mercer), the System’s actuary. This valuation is performed annually to review plan experience and recommend any necessary adjustments to the outstanding units in the Variable Annuity Plan.

Under the rules that govern the operation of the System, the board is required to periodically review the assumptions that are used to determine benefit payments. The board met with representatives from Mercer Human Resource Consulting, the System’s current actuary, to discuss the results of the experience study that is performed every five years. The board accepted the study and as a result of the study adopted new actuarial assumptions. The new assumptions take into account the fact that the life expectancy of employees and retirees has changed. Therefore, the System will switch to mortality tables that more accurately fit the demographics of TVARS’ membership.

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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