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TVA Proposes Retirement System Contribution and Offers Recommendations to TVARS Board

July 22, 2009

As previously communicated, the TVA Retirement System (TVARS) Board voted to recommend a contribution by TVA to the Retirement System (System) of $300 million for fiscal year 2010.

The TVARS Board also notified TVA that, absent any plan changes or significant improvement in actuarial experience, this level of annual contribution will be necessary over the next 30 years to reasonably provide for the long-term sustainability of the System.

TVA supports the goal of having a competitive pension plan to recruit, retain and reward employees. TVA believes it is essential for both it and the TVARS Board to work together in securing the System for the continued benefit of TVA employees, TVA retirees and TVA stakeholders. Securing the System can be accomplished by the contribution of significant funds, reducing or managing benefits, or a combination of the two.

TVA has discussed and considered the TVARS Board contribution recommendation of $300 million. 

As a sign of working together in securing the System, TVA management has recommended that TVA contribute $1 billion to the TVA Retirement System in fiscal year 2010 as an advance of contributions for the next four years (fiscal year 2010 to fiscal year 2013) provided the TVARS Board of Directors takes action to reduce the liabilities of the System by at least $600 million. 

TVA has offered recommendations to the TVARS Board for its consideration. Specifically, TVA has asked the TVARS Board to consider a new method by which the annual Cost of Living Adjustment (COLA) would be calculated and the lowering of certain interest rates by the System. 

There will be no changes to retirees’ pension or supplemental benefits that they are currently receiving. 

The combination of these efforts − a $1-billion contribution from TVA and a $600-million reduction in liabilities by the TVARS Board − will be a strong first step toward the long-term sustainability of the System.

This recommendation has been communicated to the TVARS Board for its consideration. As of this date, TVARS has not acted on any liability reductions. Details regarding any changes that may be made to benefits payable to retirees or employees have not been determined. 

Additional information will be communicated as it becomes available. 

TVA is committed to working with the TVARS Board in providing a competitive and financially sound retirement system.

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