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TVARS Board Offers Employees an Update on Retirement Assets

September 19, 2008

In response to the uncertainty in the financial markets, the TVA Retirement System Board of Directors (System) thought it important to communicate what it currently knows about the impact to the TVARS assets and the TVA Savings & Deferral Retirement Plan “401(k)”.

The System had some exposure to The Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and Lehman Brothers through stock and debt held by some of the System’s money managers.

“The good news is that the System’s investments are broad and diverse, which mitigated the losses that could have occurred in these volatile markets,” says Randy Snyder, executive secretary of the Retirement System and TVA’s vice president of the Retirement System.

The markets in general are down year-to-date. The only asset class with a positive return has been U.S. Treasuries. This fiscal year through August, the System’s assets have lost about 9.5 percent of their value.

Snyder says this is compared to the System benchmark, which is down 9.9 percent for this same period. He adds that in times like these it is hard to predict the behavior of the markets, but the System remains focused on its long-term strategic objectives.

“We continue to follow our policy benchmark as recommended by our consultant, Wilshire Associates,” says Frank Alford, vice chair for the TVA Retirement System Board.

Fidelity Investments serves the System as the trustee of TVA’s 401(k) Plan and as the record keeper of TVA’s fixed and variable funds.

Snyder says that as a provider of record-keeping services for the TVA Plan, Fidelity’s services are governed by federal law, including the Employee Retirement Income Security Act (ERISA) of 1974. ERISA generally requires that 401(k) plan and other retirement-plan assets be held in trust − that is, segregated from employer or record-keeper assets.

“Therefore, if a record keeper or employer were to face financial issues, a participant’s account would be protected from creditors of the employer and the record keeper,” says Snyder.

During the recent market volatility, Fidelity has asked TVA to assure employees that protecting the solvency of their 401(k) Plan assets is one of their top priorities. Employees can click here and log into their NetBenefits account for more information.

“During these unprecedented markets, TVA continues to support the TVA Retirement System,” says Kim Greene, TVA’s chief financial officer.

The TVARS Board will continue to monitor the situation and provide updates to employees as needed.

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