Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 276

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 1
Chunk 276
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A uses a process that incorporates actual historical asset class returns and an assessment of expected future performance and takes into consideration external actuarial advice, the current outlook on capital markets, the asset allocation policy, and the anticipated investment expenses and impact of active management.  Asset allocations are periodically updated using the pension plan asset/liability studies and are part of the determination of the estimates of long-term rates of return.  The TVARS asset allocation policy diversifies plan assets across multiple asset classes so as to minimize the risk of large losses.  The asset allocation policy is designed to be responsive to changes in the funded status of TVARS.   In June 2025, the TVARS Board approved a new asset allocation, but had no changes to the 6.50 percent expected return on assets assumption adopted in 2022. 

    Compensation Increases.  Assumptions related to compensation increases are based upon the latest TVA compensation experience study performed in 2023.  Future compensation is assumed to likely increase at rates between 3.00 percent and 5.50 percent per year, depending upon the employee's age, and is used to determine the benefit obligations and net periodic benefit cost.  The average assumed compensation increase is based upon the current active participants.

    Mortality.  The mortality assumption is comprised of a base table that represents the current future life expectancy adjusted by an improvement scale to project future improvements in life expectancy.  TVA's mortality assumptions are based upon actuarial projections in combination with studies of the actual mortality experience of TVA's pension and post-retirement benefit plan participants while taking into consideration the published Society of Actuaries ("SOA") mortality table and projection scale at September 30, 2025.  

The following mortality assumptions were used to determine the benefit obligations for the pension and other post-retirement benefit plans at September 30, 2025, 2024, and 2023.  Assumptions used to determine year-end benefit obligations are the assumptions used to determine the subsequent year's net periodic benefit costs.

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Mortality AssumptionsAt September 30 202520242023Mortality tablePRI-2012 Upper Quartile table (adjusted)PRI-2012 Upper Quartile table (adjusted)PRI-2012 Upper Quartile table (adjusted)Improvement scaleMP-2021 (modified)MP-2021 (modified)MP-2021 (modified)

Health Care Cost Trends.  The health care cost trend rates are assumptions about