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USPS pension puzzle (revisited)

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Attentive (and we mean really attentive) Fedline readers might remember a post from last month about the apparent disconnect of the Office of Personnel Management’s charging the U.S. Postal Service more for its current pension contributions at the same time the Obama administration is proposing a big refund to the Postal Service on past contributions. We’d asked OPM for comment and finally received an answer yesterday.  So, in the interest of thoroughness, we’re rerunning the original Feb. 22 post, with  the OPM response appended verbatim.

Here’s an intriguing nugget from the U.S. Postal Service’s latest quarterly report: Even as the Obama administration agrees that the Postal Service is owed a huge refund on past payments to its pension program, the Office of Personnel Management—headed by Obama appointee John Berry—is requiring it to shell out more for current payments.

For the first quarter of fiscal 2011, the Postal Service’s contributions to the Federal Employees Retirement System, or FERS, rose by $24 million—from $1,469 million to $1,493 million—versus the same period in fiscal 2010, even though the USPS workforce continued to shrink, the report says. The reason, according to the Postal Service, is that its employer contribution rate increased from 11.2 percent to 11.7 percent of eligible payroll. The agency is appealing that boost to a federal board of actuaries on the grounds that its FERS obligation is already overfunded to the tune of some $6.9 billion.

In its newly released 2012 budget request, the White House proposed refunding the Postal Service that money over 30 years, starting with a $550 million down payment this year.

At least to non-actuarial minds, it seems contradictory to be giving with one hand and taking away with the other.  In an email, OPM spokeswoman Brittney Manchester offered the following explanation:

“Under current law, the Postal FERS ongoing contributions and the Postal FERS surplus are subject to different provisions of law that are independent of each other.  Without specific legal authority, the Office of Personnel Management cannot make adjustments to Postal’s ongoing contributions despite the fact that there is a surplus in the retirement fund attributable to Postal employees.

“The October 1, 2010, increase in the FERS employer contribution rate applied not just to the Postal Service, but to all other agencies as well.  Under FERS, all agencies pay the same contribution rate.   Different provisions apply to the overall funding situation. Retirement funding is a long-term matter, and estimates have to be made covering economic and other factors that are many years distant.  Over the past quarter century, Postal Service FERS funding has grown gradually to exceed projected future liabilities by approximately $6.9 billion.”

“The President’s 2012 Budget provides short-term financial relief through a sensible and fair restructuring of key retiree liabilities, while seeking to work with Congress and stakeholders to secure needed reforms to modernize its business model.”

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Comments

  1. John Klopp Says:
    March 18th, 2011 at 5:00 pm

    just give back the post office money and they would be fine.

  2. J. Jameson Says:
    March 19th, 2011 at 8:08 am

    Sir, Get the story straight. Congress hung a $5.5 billion payment on the Post Office for “pre-paying” retiree health benefits in 2006. No other federal agency or private company “pre-pays” retiree health benefits! ! !
    This was done by Congress because the Post Office was (and is) profitable. Doing this created a “slush fund” effectively stealing the Post Office operating capital.

    Then, Congress “found out” that the Treasury had “accidentally” been overcharging the Post Office for retirement contributions for the last FORTY YEARS !
    Naturally, Congress now refuses to give the Post Office the money back; thus depriving the Post Office of the money to survive Congress’s theft of the above mentioned money.

    This double whammy to the Post Office’s finances is effectively killing what the government calls the “most trusted federal agency” and giving the Post Office license to close small town post offices and possibly stop Saturday delivery.

    All this is political gamesmanship.

    The plain facts are that:
    1) The federal government owes the Post Office approximately $65 billion for overcharging it for FORTY YEARS for retirement contributions. Naturally in true “spend money like drunken sailors” fashion Congress has spent the money.
    2) Congress passed legislation in 2006 called the Postal Accountability and Enhancement Act that forced the Post Office to bank $5.5 billion per year “pre-paying”retiree health benefits. No other federal agency or private company does this because it is a bad business practice.
    With this Congress effectively created a congressional “slush fund” allowing them to send the money on what they wanted. They learned this disgraceful underhanded scam doing the same thing to Social Security.
    At this point, they are effectively reducing the “universal delivery” concept of the founding fathers and destroying the best federal agency the country has.

    Why ?

  3. marlene m silva Says:
    March 19th, 2011 at 11:13 pm

    i am retired postal under fers and i spent 9 yrs in the navy. i bought back my military time with penalty cause personnel screwed up and i paid into my retirement and social security. let the peeps in washington do what is right and pay the postal service what is owed. i dont see senators and congressmen lining up to give back any of their pay or benefits and they can afford it alot more than me.

  4. Robert Says:
    March 21st, 2011 at 11:13 am

    Sounds like business as ususl for the government and the USPS. Ignorant leading the mindless. Uncaring and unfeeling leading the blind and heartless. So? You think the current troubles with the USPS came about overnight?

  5. Patrick Lonergan Says:
    March 21st, 2011 at 1:29 pm

    If the Postal Service’s contributions rose by 24 million, the respective sums for the current and previous fiscal years should be 1.469 and 1.493 billion dollars, not million as your article states.

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