TVA Pension Fund Underfunded by Billions; Consumers May Pay

TVA’s pension fund for 24,000 retires has unfunded liabilities of about $4 billion, according to the Chattanooga Times-Free Press, and ratepayers could be making up the difference.
Fully funded, TVA’s retirement plan should total $11.5 billion.
Instead, it now stands at $7 billion.
TVA has infused it with almost $1.3 billion since 2009 — ratepayer money.
But this year, the federal utility didn’t add money, and Chief Financial Officer John Thomas says the fund’s $3.5 billion gap could be made up through market gains in 10 to 15 years.
“TVA is going to stand behind its obligations to employees and retirees,” Thomas said, adding that the fund’s market investments had a good year in fiscal 2012.
Despite paying out $650 million to retirees over the past year, the fund still gained $500 million from market growth to reach its current $7 billion.
But some TVA retirees are not happy that the utility did not make a board-approved discretionary $300 million contribution in 2012. The utility put $1 billion in the fund in 2009 and an additional $270 million in 2011.
As recently as 1997, the pension fund was overfunded by about $2 billion. For at least six years before 2008, TVA didn’t put in any money.
A national pension expert who briefly reviewed TVA’s August quarterly report to the U.S. Securities and Exchange Commission said Friday that ratepayers should ask why they must shoulder the burden of meeting pension obligations.
“What they’re saying is, ‘We’re financing our pension with future revenues,'” said Harry Dressler of Dressler Strategic Advisors Inc. in Florida.

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