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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. 20.

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 period ended June 30, 2012. Performance for the quarter was slightly negative with the System earning -1.06 percent on its investments. For the 12-month period ended June 30th, the System earned 1.55 percent and ranked in the 35th percentile among the 498 plans in Wilshire's Total Fund Universe. The System's annualized return over the last 3 years has been 12.12 percent. This performance ranks in the 17th percentile among other institutional funds followed by Wilshire.

The TVARS board reviewed the fund's asset allocation. The asset allocation review involved an analysis of long-term expected returns, risks and correlations of various asset classes. The Board approved a new asset allocation policy that includes additional asset class diversification and maintains the long-term expected return of 7.25 percent at the same expected volatility of 10.5 percent.

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
  • 401(k) Plan fund performance
  • Investment management fee amendment with PIMCO

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 Reports. 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 Service Organization Controls Report covers TVARS internal controls over financial reporting and will be utilized by TVA and their external auditor, Ernst & Young, during the TVA audit.

Election Committee

The results of the election between Leonard J. Muzyn and James D. Keiffer were accepted by the TVARS board. As previously communicated in TVA Today, Leonard Muzyn was elected to serve a new three-year term that will end Oct. 31, 2015. This year's election was conducted by VR Election Services, and for the first time employees were emailed their ballots with a link to vote online. Over 40 percent of eligible voters participated in this year's election, which exceeded prior election participation percentages by double digits.

Retirement Committee

The board also approved an engagement letter with Mercer Human Resource Consulting, the System's current actuary, to provide ongoing actuarial services for FY 2013.

After a review and discussion of information provided by Mercer, the board approved 7.25 percent as the discount rate assumption for the Sept. 30, 2012, annual actuarial valuation.

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 [1] or by phone at 865-632-2672, or 800-824-3870 (toll-free).

 

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