KNOXVILLE – TVA’s 33,000 retirees and employees will get smaller cost-of-living increases in their pensions and different Medicare supplement plans for their health care next year as TVA revamps its key retirement programs to save money and offer more choices.
The TVA board Thursday approved amendments to the TVA Retirement System to help shore up the underfunded retirement plan over the next two decades.
The federal utility will boost the annual contribution to its employee pension plan to $300 million next year, up from $275 million this year, and will pay another $80 million to employees in 401(k) plans that are replacing the pension plan for younger workers.
But in exchange for TVA boosting such contributions, TVA retirees had to agree to cut their future inflation-adjusted increases by 0.25 percent below the consumer price index and cut back some other supplemental retirement benefits.
The changes, which were previously approved by the TVA Retirement System board by a 4-3 vote, will reduce TVA’s long-term funding liability by $700 million, TVA Chief Financial Officer John Thomas said. But in exchange for those savings, TVA pledged to provide at least $300 million a year to the pension fund even as it shifts more workers to 401(k) plans.