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Meeting No. 500

MINUTES OF MEETING

THE BOARD OF DIRECTORS OF

THE TENNESSEE VALLEY AUTHORITY RETIREMENT SYSTEM

June 29, 2023

[Edited to remove personal information of members and retirees and proprietary or other

confidential information pursuant to TVARS Confidentiality Policy]

The regular quarterly meeting of the Board of Directors (Board) of the TVA Retirement

System (TVARS or System) was held on Thursday, June 29, 2023, at 1:39 p.m., EDT, at the

TVA Chattanooga Office Complex, MR 1S 202, Chattanooga, Tennessee.

* * *

The following directors were present: Brian M. Child, Chair; Samuel J. DeLay, Vice-

Chair; Michael L. Belcher (via videoconferencing); Michael A. Blakely; Marilyn G. Brown; Eric

J. Davis; and Tina R. Wallace (via videoconferencing). Also present were Mark N. Meigs,

Executive Secretary; William B. Jenkins, Jr., Assistant Secretary; Sally R. Weber, Manager,

Retirement Operations; Veenita Bisaria, Manager, Investment & Risk Management; Michael B.

Barnes, Sr. Analyst, Investment & Risk Management; and W. Colby Carter, Managing Counsel.

* * *

500-1 Each director was notified in a memorandum dated June 16, 2023, of the regular

quarterly meeting to be held on June 29, 2023. A copy of the notice from the Executive

Secretary is filed as Exhibit 500-1.

* * *

500-2 (A-6974). For the Chair’s report, the Chair recognized the milestone of the 500

meeting of the TVARS Board.

Meeting No. 500 (June 29, 2023) 2

* * *

500-3 (A-6975). The Executive Secretary’s report included the following:

 The September quarterly meetings are scheduled to meet virtually via

videoconferencing with the Investment Committee meeting scheduled for Friday

September 15 and the remaining committee meetings and the Board meeting

scheduled for Thursday September 21.

 The Executive Secretary provided information to the Board on the TVARS staff’s

education, outreach, and service work during the quarter and shared how this work

shows the care the TVARS staff has for TVARS members, retirees, and beneficiaries.

* * *

500-4 (A-6976). The Legal Update included the following:

 Managing Counsel informed the Board that TVARS has notified TVA of the $300

million minimum required contribution to TVARS for FY 2024, as required by

Section 9B of the TVARS Rules and Regulations, and has also provided TVA with a

copy of Mercer’s valuation report and a copy of the 2022 TVARS annual report with

audited financials of TVARS and the 401(k) Plan, which is also required by the

TVARS Rules and Regulations on an annual basis.

 The Managing Counsel provided information to the Board on the provisions of

SECURE Act 2.0 that are currently applicable to the TVARS retirement plans,

including the change in age from 72 to 73 for required minimum distributions and

mandatory Roth 401(k) catch-up contributions for participants who are highly

compensated as defined under the Act.

A copy of the Legal Update is filed as Exhibit 500-4.

* * *

500-5 (A-6977). The Board noted its previous notational approval on May 8, 2023, of

the Minutes for Meeting No. 499 held March 3, 2023. Following notational approval, the

approved minutes were posted on the TVARS website.

* * *

Meeting No. 500 (June 29, 2023) 3

500-6. As a part of the Consent Agenda, the Board accepted the reports as of March 31,

2023, listed below in A-6978, A-6979, A-6980, and A-6981:

 A-6978 Treasurer’s Report (filed as Exhibit 500-6(a))

 A-6979 Investment Performance Report prepared by Wilshire Advisors LLC

(Wilshire) (filed as Exhibit 500-6(b))

 A-6980 Report of retirements approved (filed as Exhibit 500-6(c))

 A-6981 Quarterly review for the TVA Savings and Deferral Retirement Plan

(401(k) Plan) prepared by Fidelity Investments Institutional Services

Company (filed as Exhibit 500-6(d))

* * *

500-7 (A-6982). The Audit Committee report consisted of the items reported below at A-

6983 and A-6984, and of the following items:

 Prior to the meeting, the Board met with Charlotte Vrba, Ann Zander, and AJ

Quebbeman of Crowe LLP, the System’s auditor, to discuss the results of fiscal year

2022 financial statement audits of the System and the 401(k) Plan and Crowe’s

unqualified opinion letters on the clean audit. Following the meeting with Crowe,

Brent Roberts and Hayley Huskey of the TVARS financial reporting staff reviewed

with the Board the 2022 TVARS Annual Report. A copy of the 2022 TVARS Annual

Report, including audited financial statements and opinion letters, has been provided

to the Board, posted to the TVARS website, and is filed as Exhibit 500-7(a).

 Prior to the meeting, the Executive Secretary presented to and discussed with the

Board the estimated fiscal year 2024 TVARS budget compared with the current fiscal

year 2023 budget. A copy of the TVARS fiscal year budget comparison is filed as

Exhibit 500-7(b).

* * *

500-8 (A-6983). Upon the recommendation of the Audit Committee, the Board voted to

approve an engagement letter with Crowe to perform the fiscal year 2023 financial statement

audits of the System and the 401(k) Plan. A copy of the engagement letter between Crowe and

TVARS is filed as Exhibit 500-8.

Meeting No. 500 (June 29, 2023) 4

* * *

500-9 (A-6984). Prior to the meeting, the Board met via videoconferencing with Kara

Altenbaumer-Price of McGriff, the System’s insurance broker, which reviewed the System’s

current fiduciary liability insurance program for the Board and staff and provided a

recommendation on renewal coverage. Following this review, upon the recommendation of the

Audit Committee, the Board voted to approve a 1-year renewal of the System’s fiduciary liability

insurance policy with $10 million in total coverage, subject to a $500,000 general deductible and

$2.5 million class action deductible, using Chubb for the first $5 million in coverage and Euclid

for the second $5 million in coverage. A copy of McGriff’s Proposal of Insurance presentation

for TVARS is filed as Exhibit 500-9.

* * *

500-10 (A-6985). The Retirement Committee report consisted of the items reported

below at A-6986 and A-6987, and of the following items:

 At the March meeting, the Retirement Committee asked the TVARS staff to work

with TVA to gather information on sick leave benefits and report back to the

Committee (see Minute Entry 499-6). Prior to the meeting, the Executive Secretary

shared information from TVA regarding the governance authority and responsibilities

around sick leave benefits for TVA employees. At the Board meeting, Director

Blakely on behalf of the Retirement Committee clarified the request and requested

information on the difference between the Original and Cash Balance Benefit

structures with the use of sick leave in the calculation of benefits and whether the use

of sick leave in the Original Benefit could be translated to the Cash Balance Benefit.

 As a follow-up on information provided by Fidelity during the Board’s due diligence

trip in Boston, Director Blakely asked Director Wallace in her role as TVA’s Vice

President, Total Rewards, Digital Solutions & Data, if more information could be

gathered on the potential investment options for TVA employees participating in

Health Savings Accounts (HSAs).

* * *

Meeting No. 500 (June 29, 2023) 5

500-11 (A-6986). Prior to the meeting, the Board reviewed with Mercer Human

Resources Consulting (Mercer), the System’s actuary, the results of the actuarial study analyzing

the System’s experience over the 5-year period from October 1, 2017, to September 30, 2022. As

a part of this review, Mercer discussed with the Board the various proposed changes to actuarial

assumptions as a result of the experience study. Upon the recommendation of the Retirement

Committee, the Board accepted Mercer’s experience study report and requested additional

discussion of questions around the adjustment of factors for benefits calculations as a result of

assumption changes from the experience study. A copy of Mercer’s Experience Analysis:

10/1/2017 – 9/30/2022 for the System, dated June 2023, is filed as Exhibit 500-11.

* * *

500-12 (A-6987). Pursuant to the TVARS Administrative Claims and Appeals

Procedures, the Board considered a disability retirement appeal by [redacted], a current TVA

employee. As a part of the appeal review, [redacted] provided the TVARS staff with additional

medical information regarding his disability claim, which was submitted to ForHealth Consulting

at UMass Chan Medical School, the System’s new disability retirement medical reviewer. Based

on the determination by ForHealth following its review and evaluation of [redacted] disability

retirement application file and records, upon the recommendation of the Retirement Committee,

the Board approved [redacted] appeal and disability retirement application. A copy of the memo

from the Executive Secretary to the Board dated June 29, 2023, regarding this disability

retirement appeal is filed as Exhibit 500-12.

* * *

500-13 (A-6988). The Election Committee report consisted of the item reported below at

A-6989.

Meeting No. 500 (June 29, 2023) 6

* * *

500-14 (A-6989). At the March meeting, the Election Committee approved the schedule

for this year’s election (see Minute Entry 499-13). The Election Committee provided an update

on the election process noting that the nomination period has commenced and will close on July

with candidate information being posted after Committee review. A copy of the detailed

Election Schedule is filed as Exhibit 500-14.

* * *

500-15 (A-6990). The Investment Committee report consisted of the following items:

 The Board was provided and took note of information regarding asset allocation and

investment manager asset transfers during the first quarter of 2023. A copy of the

information is filed as Exhibit 500-15(a).

 The Board was provided and took note of information on TVARS staff due diligence

meetings with investment managers and service providers for the period February

2023 through May 2023. A copy of the information is filed as Exhibit 500-15(b).

 On June 15, 2023, Wilshire presented to and discussed with the Investment

Committee new asset allocation evaluation work with the TVARS investment staff on

the System’s portfolio taking into account recent changes to Wilshire’s 10-year

forward-looking capital market return assumptions and the opportunities available

given the stage in which TVARS is now investing since adopting a de-risking plan in

June 2021. This current asset allocation work is an asset-only analysis and a broader

asset/liability study that incorporates updated actuarial data will be performed later

this year. A copy of Wilshire’s asset allocation review dated June 15, 2023, is filed as

Exhibit 500-15(c).

 On June 15, 2023, Wilshire presented to the Investment Committee the risk reporting

dashboard for the total investment portfolio through March 2023 and the various

changes in investment risk as a result of certain factors over the past 1-year period. A

copy of Wilshire’s Risk Analysis report for TVARS dated March 2023 is filed as

Exhibit 500-15(d).

 On June 15, 2023, Managing Counsel and Mercer provided an update to the Board on

the status of and key focus areas involved with the review of TVARS governance

documents and policies and upcoming timeline for review with the Board. A copy of

the TVARS governance documents and policies progress update is filed as Exhibit

500-15(e).

Meeting No. 500 (June 29, 2023) 7

 On June 15, 2023, Tom Woods, Melissa Cabrera, Jeff Givens, and Garrett Tolley of

Fidelity met with the Board to provide a business planning update for the 401(k) Plan,

including accomplishments during 2022, plan and participant goals for 2023,

participant engagement in various areas, by various metrics, and compared with

peers, and information on the one-on-one guidance and planning support for

participants provided by Jeff Givens and Garrett Tolley who are financial planning

consultants dedicated to TVA employees and retirees in the 401(k) Plan. A copy of

Fidelity’s 2023 Business Planning Update is filed as Exhibit 500-15(f).

 On June 15, 2023, Mercer Investments LLC, the System’s defined contribution plan

consultant, provided to the Investment Committee the 401(k) Plan quarterly review

covering the following: the forward-looking committee calendar through March

2024; 401(k) Plan asset allocation as of March 31, 2023; investment performance and

expense ratios of the 401(k) Plan fund line-up, absolute and compared to benchmarks

and peer funds, as of March 31, 2023; and a governance review that included current

401(k) Plan statistics, Fidelity annual fees as the provider of recordkeeping and

trustee services, judicial update, and regulatory and legislative updates, including

information on SECURE Act 2.0 retirement provisions and agency guidance. Mercer

also provided and discussed with the Investment Committee a preliminary review of

Fidelity’s managed account service available to 401(k) Plan participants, Fidelity

Personalized Planning & Advice (PP&A) with Strategic Advisers, with a follow-up

on the review at the September meeting. As a part of this review, Mercer indicated to

the Committee its continued support on the use of PP&A as an optional service to

Plan participants with continued monitoring over time. A copy of Mercer’s Q1 2023

DC Quarterly Review dated June 15, 2023, is filed as Exhibit 500-15(g).

* * *

The meeting was adjourned at 1:55 p.m., EDT.

___________________________________

Executive Secretary

__________________________________

Chair