published Thursday, November 3rd, 2011

TVA employees balk at Obama plan to pay for pension benefits

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    The Tennessee Valley Authority offices are located on Market Street in Chattanooga.
    Photo by Jenna Walker.
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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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about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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ann said...

Jim Hovious,has a great ideal,i agree with him if they have to pay then congress and all goverment and federal emploers should have to do the same and not be able to vote themselves a raise to make up the difference or for any other reason we the people should be able to vote as to them getting a raise or not,Americans on s.s has had no raise in 2 years,but yet those in washington voted themselves a raise,so Jim stick to it and don;t let them run you over with this,show obama he;s not the boss over everything

November 3, 2011 at 12:37 a.m.
Reardon said...

Guess TVA wouldn't mind becoming privatized then?

November 3, 2011 at 5:31 a.m.
EaTn said...

Just a reminder to those who are fortunate enough to have good jobs, today in the news it's reported that one in fifteen Americans now live in severe poverty.

November 3, 2011 at 6:03 a.m.
joneses said...

I think the pension plans for TVA employees should be eliminated and they like all government employees should contribute to 401Ks like the employees in the private sector. I say this as the only increase in income is happening with government employees. There is no salary freezes within TVA. What they do to circumvent this so called salary freeze is is promote people to a higher pay grade. The salry freeze means pay grades are staying the same.

November 3, 2011 at 6:37 a.m.
potcat said...

TVA Gambles with their Pesion Funds with the Wall Street Casino Investment Thieves, and i have just read in this NewsPapper that they lost a lot of money by letting Wall Street Invest their Pension Fund Monies in the betting dens by the Gamblers of WAll Street,and guess what the CEO said would have to be done to make up this money, The TVA Electric Rate payers- thats every one who pays an Electric bill will have a increase on their Electric Bill to make up for their Gambling loses. I don't want to pay for any ones Pension Fund, TVA or a Politicians. If you want a Retirement Pension Fund, then take out of your Pay Check and Gamble with the Thieves or put in in Savings or a IRA, i don't care, but Quit Lying and telling every electric bill payer that their not the ones paying your Gambling Debts and Pension Fund. The CEo of TVA *&^$0oki3412kd,I can't say what i want to about that, he will bust Hell wide open, if they are one, which i hope they are, just for him and his kind. I would'nt be in his shoes for his socks,EVIL!!!

November 3, 2011 at 7:01 a.m.
fairmon said...

TVA pensions should go the route many private plans have done where the employee funds their own retirement plan with various matching contributions.

The TVA is $24 billion in debt. Who is so naive to think the customers of TVA are not the payers of that debt and interest? TVA is the typical over staffed, over paid under worked government operation. Privatizing the TVA is way over due.

November 3, 2011 at 7:04 a.m.
redbirds1 said...

harp... i'm guessing you've never paid a utility bill to a privatized company such as TVA?

Your utilities would immediately double... that's no exaggeration either.

I agree if TVA is made pay 1.2% that the President/congress/etc should also be paying. Put your money where your mouth is Mr. President!

November 3, 2011 at 7:21 a.m.
inquiringmind said...

EaTn you are on the right track but in Chattanooga, according to Census data, 26% of the individual population lives at or below the poverty line.

On TVA, the price of electricity is driven by the cost to produce it and that included wages and benefits. To ask TVA to self-fund, at least partially, pensions is no different than virtually every other company in Chattanooga. I paid into a 401(k) (with some employer match) and IRA to cover my retirement, to ask TVA employees to do something similar isn't imposing a hardship.

Saying that, I think it is reasonable for companies to fund a pension plan. We don't realize how since the 1970's a great much more profit from companies now is funneled back into senior executive salaries and perks and into stockholders pockets. The increase wages have dramatically slowed relative to profit growth.

November 3, 2011 at 7:31 a.m.

First of all, the Whitehouse plan is not enough. Proposing a 0.4 percent increase for all federal workers is laughable, at best. Mr. President, if you want to be a serious leader, then seriously lead. A plan to cut $21 billion over 10 years is not a serious plan when the current debt is nearing $15 triliion, or nearly $48,000 per citizen.

Second, Mr. Jim Hovious is right to ask Congress to match the silly proposal. What's good for the golden goose...

November 3, 2011 at 9:05 a.m.
NeverMind said...

I work for TVA. When I retire, my monthly pension will equal 21% of my current monthly pay. The bulk of my retirement income will come from my 401k plan and other savings.

TVA employees do not receive the generous benefits that other federal workers receive.

November 3, 2011 at 9:55 a.m.
holdout said...

Nevermind I don't know how TVA pensions work but I do know that many government workers also take a beating on social security. People claiming that government pensions are lavish don't realize or simply ignore the "offset" that government pensions cause. Even if they paid into social security for twenty five years their benefits will be cut to close to zero if they draw a government pension.

November 3, 2011 at 10:18 a.m.
potcat said...

That is simply not true. If things stay as they are right now on Goverment Pensions, i would encourage every young person to work for the Goverment or State. Of course these Pension plots can not continue. Please read the Nov.issue - Vanity Fairs "California and Bust" by Michael Lewis who goes where the buck literally stops- the local level. Its a must read, it helped me understand a little better about Pensions and how the States and every little Town or Big Cities are investing and playing the Stock Market with their Bonds and Pension money. Read it and weep, you surely will when you see what is going to happen. Revolution will be televised and 99% will participate and the 1% will be in their bunker panic rooms.

November 3, 2011 at 11:24 a.m.

When it's all boiled down it comes down to the Federal Government being too big. Reducing it's size is the only cure for our problems.

November 3, 2011 at 12:12 p.m.
holdout said...

Yes Potcat it is true. Look on the social security website and look up governmental pension offset and windfall offset. And where do you think 401k 403b and such retirement plans are invested anyway. All pension plans are in stocks except social security and insurance plans.

November 3, 2011 at 12:59 p.m.
Marathon5454 said...

How spoiled are these TVA government workers? They're appalled at the idea of contributing to their own retirement......like those of us in the real world do Government workers....they're way overpaid and there's way too many of them

November 3, 2011 at 2:21 p.m.
GoVolsGoBama said...

The fact is that TVA only provides a pension for employees hired before 1996. All employees hired after that date only get the typical 401K investment opportunity like the rest of private industry. TVA decided a long time ago to no longer provide a pension to its employees, after those that are grandfathered in are worm dirt. TVA is nothing like the other government entities, and no longer receives Federal Funding. TVA even now pays for all river/flood control, parks and recreation out of their operating funds, they no longer receive Federal Funding for those items. As far as being over paid, I have worked both private, government, and TVA, and I can say without a doubt TVA employees are underpaid compared to private and government

November 3, 2011 at 2:51 p.m.
joneses said...

How can TVA say they are not funded by the government (taxpaying American citizens) when the 25 billion dollar debt is added to the fedral debt? This makes no sense. There are many private companies, Duke Energy, Southern Company that supply low cost electricity that are making a profit. If TVA were a private company with 25 billion dollars in debt they would have been bankrupt many years ago. all the TVA dams arein need of repair. The Nuclear Plants are past their intended life expectancy, the fossil plants are old and a maintenance nightmare. with this in mind and the dbt TVA has they are actually not worth that much and will continue to be a burden on the taxpayer.

November 3, 2011 at 3:41 p.m.
GoVolsGoBama said...

The Tennessee Valley Authority is a wholly-owned, but self-funded agency of the U.S. government. TVA meets its funding needs with operating revenues and power program financings. TVA debt securities are obligations of its power system and are only issued for power program purposes, including refinancing of existing debt. TVA debt securities are not obligations of the U.S. government and do not carry a government guarantee.

TVA issues a variety of debt securities. TVA Discount Notes have maturities of less than one year. TVA may issue long-term bonds with final maturities of up to 50 years. These bonds and notes are available to investors through banks, brokers and investment dealers.

Obtained straight from the TVA Government Website.

November 3, 2011 at 3:50 p.m.
GoVolsGoBama said...

Examination of Southern Company Financial report: http://www.southerncompany.com/annualreports/ar01/pdf/financial.pdf from 2002, shows them to have a comparable debt to that of the TVA. As would be expected, they fund that debt with stock offerings, bonds and other securities as necessary. TVA has to operate within the same financial guidelines as the private sector now. They were removed from the Federal umbilical cord many years ago.

November 3, 2011 at 4:03 p.m.
stanman72i said...

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

It still amazes me how much the current administration believe their economic policies will get our economy back to what it once was. They are so blind that they cannot see that it is their spending that is out of control and must be reduced. Congress should not be allowed to weasel out of ObamaCare and vote themselves wage increases every year. I have said for several years that if there is one issue that every American could vote on, besides an election, it should be Congress's pay. If they are not being effective, they shouldn't get a pay raise. No other job allows you to continue doing nothing and still get a pay raise. TVA is one of the most efficient and effective government agencies. They are self-sufficient and should not be held responsible for Obama's no-limit credit card.

November 3, 2011 at 4:33 p.m.
NoMyth said...

@redbirds1 said: "i'm guessing you've never paid a utility bill to a privatized company such as TVA? Your utilities would immediately double... that's no exaggeration either."

Actually, that's completely inaccurate and a huge exaggeration. The rates charged by nearly all southern and midwest utilities are lower than TVA's rates. Privatization would lower TVA's rates, but they have a huge albatross hanging around their neck...billions in debt from misspent monies in the 1980s...so, there are only a handful of companies that could buy them outright. More likely, their assets would need to be gradually divested to neighboring utilities.

November 3, 2011 at 9:09 p.m.
Iknowbetter said...

TVA employees DO contribute to their retirement with their 401(k) and social security contributions and perhaps an optional after-tax annuity similar to a 401(k). The pension is designed to replace 30 to 40 percent of their salaries after a long career (30 plus years) with TVA. 401(k) and social security and drawing from 401(k) or annuity provides the rest. If you are lucky enough to work a long career, and have a decent job, you'll do all right, just like anywhere else. The biggest hurdle for TVA retirees is having enough coming in to pay their medical insurance, if they retire before age 65. If they retire now before age 55, 80 percent family medical insurance is over $1200 per month.

November 4, 2011 at 1:45 p.m.
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