TVA debacles unending – now its pension fund deficit
May 28, 2009
Everyone has heard about the huge TVARS pension fund shortage. I use the word shortage because it also is another word for stealing. And that is what the TVA has done to the pension account for some 35,000 TVA employees and retirees and their families, they have stolen from it.
The Tennessee Valley Authority Board of Directors clearly should be held personally liable for the shortage in that fund.
A TVARS board member, Mr. Leonard Muzyn, in the Chattanoogan wrote to TVA board members:
“The Board (TVARS) has a fiduciary duty to the more than 35,000 Tennessee Valley Authority (TVA) employees and retirees, as well as their beneficiaries, to insure that TVARS pays them the pension benefits promised by TVA.”
But apparently TVA has no such “fiduciary duty” to provide those benefits because the TVA has not held up its end of the bargain for a long time.
Big mistake number one; you can’t trust the TVA to do what is right much less what is legal. They will worm and weasel their way out of every tight spot with legal maneuvering, delays and obfuscations. TVA is famous for it’s ‘we’re looking into that’, ‘thanks for bring it to our attention’, or ‘we’re working on that’ with no intention of ever doing anything about it unless required.
A current example is TVA’s financial obligations to repair and “to make whole” the monstrous Kingston disaster. Now TVA wants to be “immune from prosecution” from any suits that may arise from its own negligence. TVA “law” states it succinctly, TVA can “sue and be sued”.
Big mistake number two; TVA employees never should have developed their own retirement system outside the framework of the normal federal government employees’ retirement plans.
My suggestion would be for the TVARS board immediately to apply for inclusion in the regular government retirement system. It likely would be a net loss to some retirees but it would assure there would be a funded retirement system. That assurance now is very uncertain.
“The System currently has a shortfall of either $2.9 or $5.1 billion”, says Mr. Muzyn. And that depends on which scenario is used by TVARS actuary.
"It is interesting to note that Exelon, a private utility, expects to make $4.17 billion in pension contributions between 2010 and 2014, according to the company's Form 10-Q filed April 24, 2009,” Muzyn says.
It also is interesting to note that TVA’s contribution for the last 19 years including 2009 has averaged only $38 million a year, according to Mr. Muzyn.
"Instead of offering to adequately fund the TVA Retirement System, TVA management's response has been to pressure us to adopt reductions to promised retirement benefits, and to pressure us to request a contribution for fiscal year 2010 of only a couple hundred million dollars.” Again, this is quoting from Mr. Myzun’s letter in the Chattanoogan newspaper.
And here may be the cause of such a skinflint attitude by the TVA, Muzyn says:
"During the last twenty years of inadequate TVA contributions to TVARS, high-level executive compensation has ballooned through the use of various incentive bonus plans and a supplemental executive retirement plan (SERP). In 2006, the governmental salary cap as applied to TVA was removed. Per the public 10K financial reports filed by TVA with the Securities and Exchange Commission (SEC), executive salaries were limited to $140,000 in fiscal year 2006. In 2008, the salaries of each of the top five executives ranged from $437,863 to $726,547. Total compensation for each of these top five executives, including various incentive bonus plans and TVA's supplemental executive retirement plan, ranged from $1,036,362 to $2,470,703.”
That just about sums up why TVA’s management needs replacing now and for those presently in charge to be held accountable for the gross mis-management of TVA’s pension fund contributions.
Ernest Norsworthy
emnorsworthy@earthlink.net
http://norsworthyopinion.com