Governors and mayors around the country have been putting forth proposals to cut government worker pensions. They call these pensions “unaffordable.” So far federal employees have avoided this onslaught. But that’s changing. The Tennessee Valley Authority’s board has just approved a modified version of a cutback proposal offered by TVA CEO William Johnson.
TVA’s board, the New York Times reports, approved a plan on March 3 that would shift federal workers out of a secure defined benefit pension plan — that would provide a guaranteed monthly check for the rest of their lives following retirement — into a 401(k) plan that would have employees bearing the risk of falling investment markets. The plan would sharply lower the TVA’s pension costs, but deny employees benefits they had earned.
The Tennessee Valley Authority once symbolized the shining successes of President Franklin D. Roosevelt’s New Deal. TVA brought electricity and economic development throughout Tennessee and to parts of Kentucky, Alabama, and Mississippi, some of the poorest parts of the nation’s south.
TVA better symbolizes today the excesses of Corporate America. TVA CEO Johnson pulled down $6.4 million in 2015 personal compensation. Earning 16 times more than President Obama, William Johnson may be the nation’s highest-paid federal employee.
But the real stunner comes from CEO Johnson’s retirement assets. In less than three years on the job working for TVA, William Johnson has accumulated $3,567,489 in his company pension account, according to TVA’s 10-K report filed with the U.S. Securities and Exchange Commission.
Johnson also had an additional $305,994 in his TVA deferred compensation account, a special account for corporate executives that, unlike 401(k) plans for workers, has no limits on the amount of compensation that can be set-aside tax-free each year.
This combined $3,873,483 in Johnson’s workplace retirement savings, if invested today in an annuity, would deliver CEO Johnson a check for $23,318 each month from age 65 until the time of his death. And Johnson’s pension will grow with each additional year he serves the TVA.
There are lots of CEOs in the private sector who as members of the “I’ve Got Mine Club” don’t think twice about padding their own pockets as they cut workers job and retirement security. But we should expect more from the leader of such an important federal agency.
Scott Klinger has been stimulating conversations on the role of corporations in society for more than three decades. An Institute for Policy Studies associate fellow, he has worked from the inside as a portfolio manager in the socially responsible investment industry and a consultant to one of the world’s largest corporations and from the outside as co-director of the Responsible Wealth project of United for a Fair Economy, research director for Corporate Accountability International, and tax policy director for the American Sustainable Business Council. Most recently, Scott was the director of revenue and spending policies at the Center for Effective Government.