Pension — Cash balance

What is the Cash Balance Benefit Structure?

The Cash Balance Benefit Structure provides its participants who are vested members of the TVA Retirement System (System) with a monthly pension benefit at retirement. Participants in the Cash Balance Benefit Structure are also eligible to receive matching contributions to the 401(k) Plan of 75 cents on the dollar (the maximum matching contribution is 4.5% of fiscal year-to-date base compensation). Cash Balance Benefit Structure participants are employees who first became members of the System between January 1, 1996 and June 30, 2014, and members as of December 31, 1995, who elected to participate in the Cash Balance Benefit Structure instead of the Original Benefit Structure.

What is the pension?

The pension is a monthly retirement benefit available at retirement to vested members. Eligible retirees and surviving spouses will also receive a monthly supplemental benefit from the TVA Retirement System which can be used to help with the cost of their medical insurance. Please see the Supplemental Benefit FAQs for additional information.

How is the pension funded?

TVA contributes to the System such amounts as necessary on an actuarial basis to provide the System with assets sufficient to pay accrued pension benefits.

When will I be vested in the pension plan?

A participant in the Cash Balance Benefit Structure becomes vested after five years of cash balance service. Cash balance service is the length of time spent as a member of the System, not including credit for unused sick leave, forfeited annual leave, or pre-TVA employment military service. There is, however, an immediate vesting for death benefits as an active employee.

What is an immediate retirement benefit?

If you are vested and are at least actual age 55, you are always eligible to receive an immediate benefit. If you are vested and less than actual age 55, you may also receive an immediate benefit unless you are terminated for cause.

What if I do not qualify for an immediate retirement benefit?

A vested member who is not eligible for an immediate retirement benefit would qualify for a deferred retirement benefit. You may choose to have the benefit begin as early as actual age 55, but no later than age 65. You may also request a deferred retirement benefit even though you qualify for an immediate retirement benefit. Please see the Cash Balance Benefit Structure Deferred Retirement FAQs for additional information.

How is the amount of my pension benefit determined?

Your pension benefit is determined by dividing the value of your cash balance account at retirement by a conversion factor based on your age. Additional information about the pension calculation is in the booklet entitled “Orientation to Your Retirement Benefits.”

What is the value of my cash balance account?

The value of your cash balance account is the sum of your pay credits plus interest credits. You may obtain the current value of your cash balance account at any time on the Aon Hewitt website. At retirement, this account balance is converted to a monthly pension benefit.

What are pay credits?

Each month, your cash balance account receives pay credits equal to 6 percent of your base compensation. You do not have to make a contribution in order to receive these credits.

What are interest credits?

Your cash balance account is credited with interest each month. The monthly interest credit is determined by dividing the annual interest rate by 12 and multiplying it by the sum of your account balance at the start of the current year, plus current pay credits. Interest is compounded annually. The interest rate is established by the TVA Retirement System Board every January 1 and is determined by calculating the percentage change of the 12-month average of the Consumer Price Index for the period ending the previous October 31 over the preceding 12-month period, plus 3 percent. The System has established a minimum annual percentage rate of 6 percent for interest credits.

Can I cash out my pension?

You have the option to receive your vested pension benefit in a lump sum if you are eligible for an immediate retirement benefit, the value of your cash balance account is $30,000 or less and you elect to withdraw your balance in the Fixed and Variable Funds, if applicable.

Is my pension benefit subject to any cost-of-living adjustments?

If you meet the age requirements, your monthly pension benefit may receive cost-of- living adjustments as determined in accordance with the System’s Rules and Regulations.

What benefits are available for my beneficiary at my death?

You may choose from a wide range of options to provide income for your beneficiary, subject to spousal consent rules (see next question). Information regarding these options is available from the Retirement System and can also be found at www.tvars.com, or you may wish to attend one of the “Decisions Upon Retirement” workshops offered periodically.

Who is subject to the spousal consent rules?

If you are married and first became a member of the System after January 1, 1990, you are subject to the spousal consent rules and must name your spouse as beneficiary to receive your TVA-financed vested benefit under either an Option 2 or Option 3 survivor election. Otherwise your spouse must complete a consent form allowing you to elect another option or name another person as beneficiary. Employees who first became members of the System before that date are not subject to the spousal consent rules.

Do I also qualify for Social Security benefits?

Retired members of the System are generally eligible for Social Security benefits beginning at age 62. Eligibility for Social Security benefits is determined by the Social Security Administration in accordance with applicable law. Social Security benefits will not affect your pension benefit unless you elect the level income plan. Please see the Level Income Plan FAQs for additional information.



Related information

Orientation to Your Retirement Benefits

Deferred Retirement (FAQ)

Pension Factor Tables

Disability Retirement (FAQ)

Aon Hewitt website

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