Benefit Plans

TVA sponsors a qualified defined benefit plan ("pension plan") that covers most of its full-time employees hired before July 1, 2014, a qualified defined contribution plan ("401(k) 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 post-employment benefits, such as workers' compensation, and the SERP. The pension plan and the 401(k) plan are administered by a separate legal entity, the TVA Retirement System ("TVARS"), which is governed by its own board of directors.

The components of net periodic benefit cost and other amounts recognized as changes in regulatory assets for the three and six months ended March 31, 2020 and 2019, were as follows:



Components of TVA's Benefit Plans⁽¹⁾
	For the Three Months Ended March 31												For the Six Months Ended March 31
	Pension Benefits						Other Post-Retirement Benefits						Pension Benefits						Other Post-Retirement Benefits
	2020			2019			2020			2019			2020			2019			2020			2019
Service cost	$	15		$	10		$	4		$	3		$	27		$	22		$	8		$	6
Interest cost	104			126			4			5			208			249			8			9
Expected return on plan assets	(122		)	(120		)	—			—			(244		)	(239		)	—			—
Amortization of prior service credit	(24		)	(24		)	(6		)	(6		)	(48		)	(49		)	(12		)	(12		)
Recognized net actuarial loss	109			86			3			1			218			168			5			2
Total net periodic benefit cost as actuarially determined	82			78			5			3			161			151			9			5
Amount expensed (capitalized) due to actions of regulator	(6		)	(2		)	—			—			(8		)	1			—			—
Total net periodic benefit cost	$	76		$	76		$	5		$	3		$	153		$	152		$	9		$	5

Note

(1) The components of net benefit cost other than the service cost component are included in Other net periodic benefit cost on the Consolidated Statements of Operations.

TVA's minimum required pension plan contribution for 2020 is $300 million. TVA contributes $25 million per month to TVARS and as of March 31, 2020, had contributed $150 million. The remaining $150 million will be contributed by September 30, 2020. For the six months ended March 31, 2020, TVA also contributed $46 million to the 401(k) plan, $16 million (net of $3 million in rebates) to the other post-retirement plans, and $5 million to the SERP.

Financial markets have experienced higher volatility since September 30, 2019, due to the COVID-19 pandemic. The uncertainty as to the duration and severity of the COVID-19 pandemic has resulted in significantly lower market valuations for many investments. The impact of these events on TVA’s pension system is reflected in changes in the asset portfolio values from $8.0 billion at September 30, 2019, to $6.8 billion at March 31, 2020. TVA has not determined at this time whether additional contributions will be made to TVARS during 2020. Additionally, other post-retirement contributions related to the retiree health plans may be higher than previously assumed as a result of the COVID-19 pandemic increasing health care costs, but cannot be estimated at this time.

The ultimate impact of the COVID-19 pandemic on the pension plan and other post-retirement plans depends on factors beyond TVA’s knowledge or control, including the duration and severity of this outbreak, actions taken to contain its spread and mitigate its effects, and broader impacts of the COVID-19 pandemic on the country and region’s economy. Therefore, TVA currently cannot estimate the potential impact to the pension plan and other post-retirement plans at this time.