• on May 26th, 2014 in Labor | 8 comments

    Offering workplace benefits such as health and retirement programs and paid vacations is a well established way to attract and retain talented workers. But the structure of these offerings has been changing in the public and private sectors over the past 20 to 30 years for several reasons, including rising pension debts; a more mobile workforce; and a move towards simplified administration of benefits.

    Employers have been looking to shed excessive pension expenses and give workers more control over their own retirement programs. Increasingly, private, local, and state employers are moving away from defined benefits plans that generally pay a guaranteed sum based on wages and years of service. They are increasingly favoring defined contribution plans, such as the 401(k) plan, a pretax fund built on employee and employer contributions. Meanwhile, retirement benefits plans for federal workers, including postal employees, have generally remained unchanged since the Federal Employees Retirement System was enacted in 1987.

    Similarly, the U.S. Postal Service’s leave benefits have stayed primarily the same for decades. Days off are organized into categories – annual, personal, sick, military (if applicable), and federal holiday – and the rate of leave accrual depends on the category. When taking leave, a postal employee has to indicate which category the leave falls into. But many companies are moving toward fewer categories, such as just vacation days and sick days. This simplified approach cuts down on administrative costs.

    As the Postal Service looks for ways to tighten its belt, it is considering changes in benefits, such as a new retirement program for future workers. But it is in a bit of a Catch-22. It is required to offer compensation and benefits that are comparable to those in the private sector, but it cannot change its benefits programs unilaterally, due to legal requirements and union agreements.

    At the request of the Postal Service, we issued two white papers that benchmarked its benefit programs against those of several comparable organizations. Specifically, we looked at retirement benefits and leave policies. We found many similarities in benefit offerings, but key differences, too. For example, retirement expenses make up a larger portion of total benefits for the Postal Service than for the other organizations we studied. Also, postal employees can carry over 55 or more days of annual leave each leave year and an unlimited number of sick days. But the other organizations had far more restrictive leave carryover.

    Share your thoughts or experiences on leave programs that consolidate all days off into one comprehensive plan. Might such a program for postal employees offer flexible benefits while reducing costs? Or does the current system work well? What changes, if any, are needed to the Postal Service’s retirement plans? 

  • on Dec 31st, 2012 in OIG | 4 comments
    The Postal Service faced its own fiscal cliff in 2012 while the larger mailing industry continued to press for reform and innovation. But don’t count mail out just yet. A strong election season reminded many Americans that mail still matters, even in the digital age. And in Europe, one postal operator didn’t let 500 years of history stand in the way of reinventing itself. Looking over the headlines, the staff at the Office of Inspector General has pulled together the list below of the top 10 postal stories for 2012. After you read them, vote for your top story of the year, or let us know if we missed one. 10. Pitfalls of Sponsorship – The U.S. Anti-Doping Agency strips cycling legend Lance Armstrong of his seven Tour de France titles after accusing him of illegal doping while on the U.S. Postal Service team. 9. Sound as a Pound – Royal Mail positions itself for privatization after ending price controls, shifting its pension liability to the government, and earning a profit. 8. Regulatory Fireworks – The Postal Regulatory Commission approves a controversial and newspaper industry-opposed negotiated service agreement with Valassis and remands a portion of the Postal Service’s annual price increase, saying it ignored previous Commission orders. 7. A Vote for Election Mail – Direct mail still matters in politics. Election mail postage surged over $400 million as parties and politicians used mail to target their messages in contentious national and local elections. 6. Default This Year; Reform Next Year – The Postal Service defaults on two prefunding payments totaling $11.1 billion to the Retiree Health Benefits Fund. Lawmakers ready for a postal reform bill in the new Congress. 5. Terminator 2012: Rise of the Tablets, (Further) Decline of Print – Coincidence or not? Venerable publications, such as Newsweek and the Times Picayune newspaper, abandon or reduce their print editions, while the number of tablet owners doubled in the past year and reached 19 percent of adults. 4. Shrink to Fit – The Postal Service’s 5-year business plan calls for cutting costs by $20 billion through workforce reduction, consolidation of facilities, and elimination of Saturday delivery. In initial action, the Postal Service compromised and reduced hours at rural post offices rather than closing them and pushed back its plan to eliminate overnight delivery of First-Class Mail. 3. Postcards from the Edge – The Postal Service reaches its statutory borrowing limit of $15 billion for the first time ever and warned that it could run out of cash by October 2013, barring any significant action. 2. Brand Damage – Steady stream of bad news keeps the Postal Service in the news and threatens to hurt its brand, which could prove especially harmful as it reinvents its business model for the digital age. 1. Parcels are the New Letters – Same-day delivery trials by eBay and the Postal Service, the growth in parcel lockers, and the efforts of traditional brick-and-mortar powerhouse Wal-Mart to increase its online presence indicate a very bright future for packages.
  • on Dec 10th, 2012 in Finances: Cost & Revenue | 0 comments
    To borrow a saying often attributed to Yogi Berra, “It’s tough to make predictions, especially about the future.” Whenever people make estimates about liabilities for long- term expenses, such as pension and retiree health payments, they’re making predictions about the future. The problem is that predictions are based on the present, and the present is always changing. Since 1992, the Postal Service has had a surplus in the Federal Employees’ Retirement System (FERS) program, according to the Office of Personnel Management (OPM). A surplus occurs when assets exceed the amount of the liability. In October, the OIG released a white paper called Causes of the Postal Service FERS Surplus. The paper, produced with the assistance of Hay Group actuarial firm, examined the reasons behind the FERS surplus. Hay Group found that the surplus had emerged in part because of differences between the Postal Service and the rest of the federal government and recommended using assumptions based just on the Postal Service population rather than everyone in FERS. Hay Group developed an estimate of the surplus under Postal Service-specific assumptions. After the OIG released the paper, the Office of Personnel Management (OPM) released a new estimate of the FERS surplus as it does every autumn. In this new estimate, OPM used a different prediction for future interest rates and also made changes to demographic assumptions such as how long postal employees and retirees will live. OPM’s estimate of the FERS surplus declined substantially. To take into account this new information, the OIG asked Hay Group to update their previous estimate of the surplus to reflect OPM’s assumption changes and new 2011 data. Hay Group also included the most recent Postal Service-service forecasts about future salary increases. Hay Group found the projected surplus under Postal Service-specific assumptions to be $12.48 billion as of fiscal year (FY) 2012; whereas OPM, using FERS-wide assumptions, projected the surplus to be $3.0 billion.In either case, the Postal Service’s FERS fund is more than 100 percent funded, while Fortune 1000 companies are on average only 80 percent funded according to 2010 data. You can read more about the FERS surplus in the update to the original paper on our website.

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