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TVARS Board Holds Workshop

The TVA Retirement System board of directors held a workshop on Friday, April 22, to discuss governance polices, handle other System business and receive a briefing on the status of the lawsuit against TVARS.

The TVARS board continues to work with Ennis Knupp, an outside advisory firm, to develop and establish governance best practices. On Friday, during a special called meeting, they approved the following policies:

  • Service Provider Evaluation and Interaction Policy
  • Ethics and Code of Conduct Policy

These policies will soon be available here under “Governance Policies.”

In addition, TVARS board members reviewed and discussed the following policies:

  • Director Election/Selection Policy
  • Board Self Evaluation Policy

The TVARS board also approved a contract with E.H. Johnson & Company (a public accounting firm) to provide a Standards for Attestation Engagements report. This report is an internationally recognized third-party assurance report designed for service organizations and effectively replaces a preceding report. The new report provides service organizations a benchmark to evaluate their internal controls.

The TVARS board also selected an outside services firm, VR Election Services, a leader in the election services industry. As one of the oldest and largest independent service bureaus in the United States, VR Election Services will handle the annual election for the TVARS director position filled by an employee. The plan is for this year’s ballots to be mailed to home addresses. In this year’s election, employees can vote one of two ways: by phone, which has been available in previous elections; or online, which is a new option.

The TVARS board also approved increasing the System’s investment in the Kennedy Wilson Real Estate Fund from $10 million to $15 million.

Information on pending lawsuit

Bradley Arant Boult Cummings, the outside legal counsel for TVARS, provided the TVARS board with information regarding the lawsuit related to August 2009 amendments to the TVARS Rules and Regulations that, among other things, made changes to the cost-of-living-adjustments over a four-year period (2010-2013).

TVARS board members want to make sure TVA employees and retirees are updated on this pending lawsuit concerning the Retirement System.

In September 2010, TVARS was added as a party to a lawsuit now named Jerry Duncan, et al. v. Tennessee Valley Authority Retirement System & Tennessee Valley Authority.

The lawsuit is pending before Judge Aleta A. Trauger in the United States District Court for the Middle District of Tennessee, Nashville Division.

The plaintiffs are TVA employees and retirees seeking to represent a class of TVARS plan participants. In their complaint, the plaintiffs challenge amendments adopted in August of 2009 to the TVARS Rules and Regulations.

These amendments sought to save $300 million through reducing cost-of-living adjustments – also known as COLAs – from 2010 to 2013, raising the age of eligibility for COLAs for certain participants and reducing the rate at which fixed funds earned interest for active participants.

In light of the financial situation at the time, these amendments were adopted in exchange for a $1 billion contribution from TVA in September of 2009 in lieu of contributions for 2010, 2011, 2012 and 2013.

Plaintiffs claim that the amendments violated federal law, fiduciary duties and the federal Administrative Procedures Act. The discovery phase of the lawsuit has begun and is ongoing.

During the past two years, these same amendments have been described in issues of TVA Today, TVA Retiree Association News and other publications.

Additional updates on further developments related to this lawsuit will be communicated as warranted.

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.

 

 

 

 

 

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