Union opposes pension contribution proposal

A federal employee union is criticizing an Obama administration proposal to require employees of the Tennessee Valley Authority to contribute to their pensions beginning in 2013.

The proposal, included in legislative language the Office of Management and Budget sent to the joint congressional committee on deficit reduction this month, recommends TVA workers -- most of whom currently contribute nothing to their defined benefit plans -- begin contributing 0.4 percent over three years beginning in 2013. The provision is part of the administration's overall proposal to raise the federal employee contribution rate to their retirement plans by 1.2 percent over three years beginning in 2013 at a rate of 0.4 percent each year during that time.

The International Federation of Professional and Technical Engineers, which opposes the administration's overall recommendation, took particular issue with the provision affecting TVA employees. TVA is an independent federal entity that provides electricity for 9 million people in parts of the Southeast at prices below the national average. It does not receive taxpayer money and finances its own programs through revenues of more than $10 billion annually. Most of the 12,000 workers at the utility provider are not enrolled in the Civil Service Retirement System or the Federal Employees Retirement System.

"This seems to be an effort by OMB to bundle TVA worker pension contributions in with those of most other federal employees under either the Civil Service Retirement System or the Federal Employees Retirement System," said an Oct. 12 letter from Gregory J. Junemann, president of the International Federation of Professional and Technical Engineers, to members of the super committee. Under the administration's overall proposal, the policy change in the pension contribution level would be permanent and would affect all federal civilian employees.

About 200 TVA employees participate in CSRS or FERS, including the utility's board of directors. The law requires TVA employees who transfer from other federal agencies without more than a three-day break in service to remain in FERS or CSRS.

"While IFPTE opposes OMB's recommendation to your joint committee to increase FERS and CSRS pension contributions, we nonetheless understand that they have jurisdiction and standing to at least support such an increase," the letter said. "However, we do not feel that OMB can dictate to TVA how to run their pension system." The union said the utility's board is the appropriate entity to handle such matters.

OMB did not respond to a request for comment by the time of publication.

The utility's pension plan has struggled because of the dismal economy, so TVA put about $270 million into the coffers in September and expects to add up to $300 million more next year. As of September 2010, TVA's retirement plan had $6.8 billion in assets and $10.4 billion in liabilities.