FILE - In a July 13, 2008 file photo, Rep. Steve Cohen, D-Tenn., prepares for a debate in Memphis, Tenn. In the city where Martin Luther King Jr. was assassinated, a once-unbeatable former mayor wants the Democratic congressional primary to be a referendum on race. Willie Herenton is accusing white two-term incumbent U.S. Rep. Steve Cohen of "trying to act black." He tells voters in this majority-black city that they "need to come off that Cohen plantation and get on the Herenton freedom train." (AP Photo/The Commercial Appeal, Britney McIntosh, File) NO SALESA Tennessee congressman is urging TVA's top brass to give up some of their compensation and retirement benefits if they want to implement cost-of-living caps and other cost-saving measures for rank-and-file TVA employees and retirees.
In a letter to TVA, U.S. Rep. Steve Cohen, D-Memphis, criticized what he said was "an apparent inequity" in the way the federal utility plans to change pension benefits for employees and the lack of changes in TVA's supplemental executive retirement plans for its top brass.
Last week, the Tennessee Valley Authority Retirement System board approved a proposal to reduce the pension benefits for employees hired in the past 20 years and then shift those employees from a plan that guarantees a fixed level of benefits to a 401(k) plan for future benefit payments. TVA management has proposed even more cost-of-living caps and limits to trim $700 million of future liabilities from the TVA Retirement System, which is now $6 billion short of what it needs to meet all of its financial obligations for TVA's 23,000 retirees and their families and the nearly 10,000 employees covered by the plan.
TVA executives receive a supplemental executive retirement plan (SERP) which is not subject to the same cuts as other TVA workers.
Cohen questioned why TVA hasn't proposed similar cuts in retirement benefits among TVA executives. TVA CEO Bill Johnson's total compensation in 2015 was approximately $6.4 million, up from $4.6 million the previous year and the highest of any federal employee in the country.
"It is important that workers and executives at the Tennessee Valley Authority are subject to the same pension cuts for equity," Cohen said in his letter to Johnson. "Not only is it fair but it is ethically and morally right. By not subjecting all executive compensation to a reduction the message that's sent, intended or not, is that executives are valued more than the workers and retirees. That is bad for team morale."
Johnson's compensation is set by the nine-member TVA board of directors which is charged under the TVA Act with paying competitive salaries with the private sector. According to a study of comparable utility CEOs by Towers Watson, the median pay for the heads of other comparable utility businesses last year was more than $7.8 million.
TVA's proposed matching 401(k) benefits are nearly four times as much as what the typical Tennessee worker receives, according to the Employee Benefit Research Institute, and Johnson said TVA hasn't had any trouble recruiting qualified applicants since it changed the retirement benefits in 2014.
But TVA labor unions complain that TVA didn't adequately fund its pension program to provide the benefits it promised workers, even when the utility made a record $1.1 billion last year and boosted the pay of all of its top executives.
"When you see top executives lining their own pockets - while taking away important benefits from workers - most people know that's just plain wrong," said Gay Henson, president of the Engineering Association, IFPTE Local 1937. "Thanks to the hard work of our members, TVA earned a record net income of more than $1 billion in 2015. It doesn't make any sense to attack the very people who are helping the corporation succeed."
The TVA board could consider the TVA Retirement System changes adopted last week when it next meets in May.
"We are currently reviewing the TVA Retirement System board's counterproposal with the same care and thoughtfulness they used while considering the initial proposal," TVA spokesman Jim Hopson said Wednesday. "Obviously, we are all working to fairly balance the needs of retirees, current employees and the Tennessee Valley ratepayers we all serve."
Any change in TVA retirement benefits must be approved by both the TVA Retirement System board and the TVA board.
Contact Dave Flessner at dflessner@timesfree press.com or at 423-757-6340.