USPS Overpaid Pension Fund by $75 Billion: Report

The U.S. Postal Service has overpaid its pension obligations to the Civil Service Retirement System by $75 billion and the method for calculating this amount was unfair, says a new report from the postal service’s Office of the Inspector General (OIG).

If this money had been used to cover the USPS’s separate health benefits fund the postal service would not have to prepay $5.4 billion to cover the health costs of retired employees each year, the report said.

Specifically, the OIG found the method used to determine how CSRS pension costs for postal employees with service before 1971 are split between the postal service and the federal government is inequitable. This is partly because the USPS had to assume more financial obligations than it had to before 1971 when it operated as the U.S. Post Office Department, a government agency.

This report comes at a time when the USPS’s financial stability is weakening. The service lost $3.8 billion in fiscal 2009. Click for more http://directmag.com/postal/usps-loss-year-1117/index.html

Separately, the Postal Regulatory Commission earlier this week requested that the USPS discuss its current plans to achieve financial stability for this fiscal year and beyond.
That response is due no later than next Friday, Jan. 29.

According to the OIG, this marks the third time the postal service has been overcharged for CSRS payments. In 2002 the USPS was found to have overpaid the CSRS by $78 billion. Legislation the next year corrected this.

Then it was determined the postal service was overcharged $27 billion for CSRS military service credits. In 2006 these funds were returned to the USPS by Congress, and the surplus was used to fund retiree health care liabilities, according to the OIG.

All this led to the $75 billion overcharge for payments to CSRS retirees between 1972 and 2009, according to the report.

The OIG recommended that the $75 billion be returned to the postal service’s CSRS pension fund. Any excess above what is needed to fund those liabilities could then be transferred to the USPS’s retiree health care fund, which would fully pay for its health care liability and eliminate the need for further congressionally-required payments to the fund, the report continued.