Benefit Plans

TVA sponsors a qualified defined benefit pension plan (the "Plan") that covers most of its full-time employees, a qualified defined contribution plan that covers most of its full-time employees, two unfunded post-retirement health care plans that provide for non-vested contributions toward the cost of eligible retirees' medical coverage, other postemployment benefits, such as workers' compensation, and the SERP.

On April 11, 2014, the Tennessee Valley Authority Retirement System ("TVARS") Board approved amendments to the qualified defined benefit plan effective June 30, 2014. These amendments close the defined benefit plan to new employees and certain rehires. These employees will be eligible for a retirement benefit as participants in the defined contribution plan only.

The benefit structures of the qualified defined benefit plan for current employees and retirees — Original Benefit Structure and Cash Balance Benefit Structure — have not been changed. The provisions of the defined contribution plan for these employees will also remain unchanged.

For those employees who are eligible to participate in the new defined contribution plan only, TVA will provide an automatic, non-elective contribution equal to 4.5 percent of base compensation. In addition, TVA will contribute 75 cents to a matching account for each dollar contributed on a before- and/or after-tax basis, with maximum matching contributions of 4.5 percent of base compensation.

The components of net periodic benefit cost and other amounts recognized as changes in regulatory assets for the three and nine months ended June 30, 2014, and 2013, were as follows:



Components of TVA’s Benefit Plans
	For the Three Months Ended June 30												For the Nine Months Ended June 30
	Pension Benefits						Other Post-Retirement Benefits						Pension Benefits						Other Post-Retirement Benefits
	2014			2013			2014			2013			2014			2013			2014			2013
Service cost	$	33		$	38		$	5		$	6		$	98		$	115		$	14		$	18
Interest cost	139			117			8			8			418			351			24			23
Expected return on plan assets	(109		)	(107		)	—			—			(326		)	(321		)	—			—
Amortization of prior service cost	(5		)	(6		)	(2		)	(2		)	(16		)	(17		)	(5		)	(5		)
Recognized net actuarial loss	71			95			3			6			214			283			8			19
Total net periodic benefit cost recognized	$	129		$	137		$	14		$	18		$	388		$	411		$	41		$	55

TVA contributes to the Plan such amounts as are necessary on an actuarial basis to provide the Plan with assets sufficient to meet TVA-funded benefit obligations to be paid to members. In consideration of TVA’s $1.0 billion contribution to the Plan in September 2009, the Plan's Rules and Regulations ("Plan's Rules") were amended to temporarily suspend the minimum annual contribution requirements for a four year period from 2010 through 2013. In August 2013, the TVA Board approved a $250 million contribution to the Plan for 2014, which exceeds the minimum required by the Plan's Rules. As of June 30, 2014, TVA had contributed $126 million and will contribute the remaining $124 million by September 30, 2014. TVA does not separately set aside assets to fund other benefit costs, but rather funds such costs on an as-paid basis. For the nine months ended June 30, 2014, TVA provided approximately $23 million, net of rebates and subsidies, to other post-retirement benefit plans and approximately $6 million to the SERP. For the nine months ended June 30, 2013, TVA provided approximately $34 million, net of rebates and subsidies, to other post-retirement benefit plans and approximately $6 million to the SERP.