TVA is encouraging buy-outs that include a retirement option as a way to reduce the labor force in the wake of closing some coal-fired plants and to decrease labor costs.
The last time the agency had a system-wide push to encourage early retirements it resulted in a problem with the TVA pension plan. The pension plan, as with most others during the recession, took a hit when the stock market declined and currently has a deficit.
In recent years, retiree cost-of-living adjustments have been skipped on occasion. TVA had to put $1 billion into the pension system in 2009 and another $270 million in 2011. Pension costs were cited in the last increase in electricity rates. The agency did not make a contribution to the pension fund this year.
TVA doesn’t have a number on how many “voluntary reduction in force” applicants they hope to achieve.
Up until 1997, the TVA pension fund was over-funded and the agency went six years without having to make a contribution. But as the number of retirees continue to grow, any dip in the stock market could result in ratepayers having to cover a pension-fund shortfall.
TVA predicts that the pension fund will grow with the current stock market returns and will eventually eliminate the shortfall. But at what point, with early retirements and force reductions, does TVA have more TVA retirees than TVA employees?