It’s no secret the Postal Service is in a financial crisis after a $3.8 billion loss in 2009, and a projected $7 billion loss for 2010 after approximately $4 billion in cost reductions. In January 2010, the OIG reported that the Postal Service had been overcharged for FERS’s sister retirement plan, the Civil Service Retirement System or CSRS, by $75 billion. There is a complication that may reduce the FERS surplus in the future. President Obama recently signed a bill granting credit for unused sick leave for FERS retirees. The exact effect on the pension liability is unknown, but it doesn’t take an actuary to understand that it creates an additional future obligation. If the Postal Service has met its current financial obligations for FERS, should it be relieved of its future contributions? What do you think? This topic is hosted by the OIG’s Office of Audit Financial Reporting team.
on May 3rd, 2010 in Labor | 11 comments
The Federal Employees’ Retirement System (FERS) is one of the retirement programs of the U.S. government, and benefits are extended to U.S. Postal Service employees. FERS is administered by the Office of Personnel Management (OPM). Congress established the guidelines for OPM to set contribution rates and can alter them by passing new law or amending an existing law. Postal Service employees who began their careers after December 31, 1983, are automatically enrolled in the FERS. For Postal Service employees, a majority of FERS funding is accomplished through Postal Service contributions. The rest is paid by postal employees. During fiscal year 2009, the Postal Service contributed $3 billion to FERS or 11.2 percent of the salaries for FERS employees. As of September 30, 2009, the Postal Service reported a fully funded FERS pension plan that exceeds liabilities by $6.8 billion.