TVA employees balk at Obama plan to pay for pension benefits

TVA employees balk at Obama plan to pay for pension benefits

November 3rd, 2011 by Dave Flessner in News

The Tennessee Valley Authority offices are located on Market Street in Chattanooga.

The Tennessee Valley Authority offices are located on...

Photo by Jenna Walker /Times Free Press.

POLL: Should TVA employees have to contribute to their pension?

TVA employees, already under a federal wage freeze, may be required to contribute to their pension if Congress accepts a deficit-cutting measure proposed by President Barack Obama.

Beginning next year, the U.S. Office of Management and Budget wants TVA workers to pay 1.2 percent of their salary into the retirement system over three years as part of a plan to cut the federal deficit by $21 billion over the next decade.

"The president believes we all must pitch in to get our economy moving again," OMB spokeswoman Moira Mack said.

But TVA employee unions claim the proposal amounts to an unfair $12 million pay cut that won't affect the federal deficit because TVA is a self-funding, independent federal agency.

"TVA's operations today do not and cannot contribute to the federal deficit, and no reason has been advanced to justify sweeping TVA employees into the deficit reduction plan," said Steve Stutts, president of the Trades and Labor Council for annual employees of TVA.

The International Federation of Professional and Technical Engineers recently wrote letters to members of Congress, urging them to reject the White House's proposal for employee contributions to the TVA retirement plan.

"The TVA pension system is not funded with taxpayer dollars and has nothing to do with the national debt," said Gregory Junemann, president of the engineers union. "We do not feel that OMB can dictate to TVA how to run their pension system."

The Obama White House proposed that all federal workers increase the employee share of contributions to their pensions by 0.4 percent per year for the next three years, starting in the fiscal year that starts next October. The proposed increase in federal employee pension contributions comes a year after Obama imposed a two-year wage freeze on most federal workers.

As a federally owned corporation, TVA is included in the administration plan even though the federal utility hasn't received any congressional appropriations in nearly two decades.

But TVA's debt, which totals more than $24 billion, is counted in the federal deficit.

White House budget planners are trying to hold down government spending by asking employees to share in federal pension costs, which are often more expensive than private employer plans.

"Only about 15 percent of employers still provide defined benefit plans like the TVA plan and TVA's retirement benefits are definitely more generous than what most private sector workers receive," said David John, senior research fellow for the conservative Heritage Foundation in Washington, D.C.

But TVA's overall pension benefits are not as beneficial for many employees as the federal civil service plan and government taxpayers are not responsible for funding the TVA retirement plan, John said.

Jim Hovious, a TVA employee who helped organize a campaign to challenge TVA pension cuts adopted two years ago, said TVA and its workers are united in their opposition to the OMB proposal.

"If TVA employees are required to contribute 1.2 percent of their pay into their pension fund, then the politicians in Washington who pass such a law should also be required to put 1.2 percent of their pay into their pension fund, and the politicians should not be allowed to raise their own pay to make up the difference," he said.

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