on Oct 16th, 2012 in Strategy & Public Policy | 13 comments
There has been a surplus in the U.S. Postal Service’s Federal Employees’ Retirement System (FERS) pension program since 1992. Most recently, the FERS surplus was projected to be $11.4 billion, accounting for most of the Postal Service’s total $13.1 billion pension surplus. The Office of Inspector General (OIG) asked Hay Group, an actuarial firm, to examine the causes of the FERS surplus, and a new OIG white paper presents the results of Hay Group’s work. Hay Group found that the main reason for the surplus was differences between the Postal Service and the rest of the federal government. In particular, postal salary growth was lower than the assumptions made in the liability estimates. The surplus grew as actual postal experience replaced the initial assumptions used for the entire FERS population. Hay Group recommends using Postal Service-specific assumptions to provide a more accurate estimate of the liability. When Postal Service-specific assumptions are used to measure the Postal Service’s liability, the surplus increases from $11.4 billion to $24 billion. Given the Postal Service’s current financial health, the existence of the FERS surplus raises some questions. What should be done about the postal FERS surplus? Right now, there is no mechanism to return a FERS surplus once it occurs. Also, what about the contribution rate? The Postal Service currently pays the same FERS contribution rate as other federal agencies, 11.9 percent of payroll for most employees. This contribution rate has increased twice in the past 3 years despite the existence of a surplus for the Postal Service. Should the Postal Service’s contributions be adjusted to reflect its specific characteristics? What do you think? Share your thoughts in the comments below.


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The usps has been carrying large segments of the federal bureaucracy on its back for a long time...particularly the Labor Dept and its Workmens Comp programs. Same case could be made for health care programs.

In short, why should we think congress will allow the usps to reduce the money that the feds get to swell other coffers?

Finally, if the congress gave back the money we overpaid it would look like a bailout and increase the deficit BECAUSE CONGRESS HAS ALREADY SPENT IT AND USED OUR MONEY TO MAKE ITS DEBT SPENDING LOOK LIKE LESS.


Substantially reduce the contribution rate until we reach a zero balance USPS FERS pension surplus. We should have started doing this in 2007. This way, we can further help our agency through the tough times in the next several years while we focus on other issues. Also, as with the CSRS overpayments of $50-75 Billion, those in Congress will not have the feasibility to take what is rightfully due to the USPS and give it to the General Fund since it will not be available to steal.

As soon as congress finds out about the surplus, they`l figure out a way to commandeer it to pay for war or pet projects.

Asking what should be done with the surplus is a bit of a pointless exercise since that is totally under the purview of Congress. In a better world Congress would acknowledge the overages and adjust payments or, in the case of grossly excessive payments, refund the amount to the agency or apply to agency debt.
FERS isn't the only problem. It is likely, given the reduction in employee headcount and the consequences of the APWU contract that the actuarial projections in RHBF are way off base. Even if one accepts the premise for the RHBF, which is in and of itself questionable, the amount of the fund likely far exceeds a safe and necessary amount as it stands today.
Not only should Congress suspend payments to RHBF but they should allow the Postal Service to access the fund to at least partially pay retiree health benefits, perhaps on a 50/50 basis with half coming from current revenues and half from the fund.
The one thing that should not happen is Mr. Donahoe's preferred route which is taking employees and their contributions out of the Federal systems. This would likely end in the abrogation of longstanding promises and result in disaster for employees and retirees.

What about the 75 billion in the CSRS ? The government has been looting the postal service for years. All this money goes into the general fund. It is like a piggy bank for them! That is why they passed that bill in 2996 to PRE-PAY the health plan for future retirees by five and a half(5.5) Billion dollars a year. This is more free money for the government.

Sqrry, that is 2006 not 2996 when they passed that bill.

Maybe it is because so many recent FERS retirees are getting such a low percentage of their estimated annuity as their interim annuity. I retired on July 31, 2012 and am getting 21% of my estimated annuity. Not what I was promised. OPM is not getting the job done, and they don't even have to answer to us. If contacted, you are only able to speak to an information service that has no info pertinent to us. And this is just the way it is until our case is assigned, which will not happen for 9-10 months.

The NALC has claimed for the last 2 years that the FERS surplus was $11 billion and the CSRS surplus was $71 billion. The OIG now confirms they were right about FERS, how soon will they confirm CSRS? Of course, congress will step in and confiscate it to hold down the debt. Postal workers pension overpayments have propped up other Federal agencys' pension plans for years. Will they miss us when we are privatized and the overfunded pensions go with us?

why should congress act they just keep using our money for their pet projects. as a 38yr postal service employee it doesn't take a genius to know what our reps want to do with the postal service

Shouldn't that be held in escrow to pay for the removal of Post Office Boxes when the cluster box system goes into place for carriers in suburban neighborhoods. You know, so energy can be saved as we morph into a carbon friendly country. I mean the only need for these boxes then (hypothetically now) is so people can hang advertisements on them to avoid a costly neighborhood mailing. My estimate for removal and environmentally friendly disposal of 1000 of these boxes would be around $166.00 U.S./unit. Assuming a 5' pipe or wooden stand, 60# concrete base, 60# asphalt or topsoil/seed, and the box itself. It's not like title to the box came with the real estate.?? let's call it 150 million boxes???
There goes $24 Billion. But, I mean whose counting anyway?

The law needs to be changed so that OPM can make adjustments without requiring Congressional action, since Congress is so grid-locked. Unfortunately, changing the law also requires Congressional action, so there you go. Neither OPM nor Congress is highly-motivated to make the change anyway, since USPS overpayments fortify the retirement accounts of employees of other government agencies, which would otherwise have require Congressional appropriations, ultimately funded by the taxpayers.

The USPS is an organization living in the past. It services a dying technology ought to have the government sever all ties with it. It would not last 5 years as a private business.

As for the "overpayments", the USPS is a governmental industry. As such, the government can and should take any and all profits.

As I have re-iterated to other employees over the years, while they pooh-poohed my analysis. How can you budget the salvation of the USPS and depend on a (fixed rate of return) of FERS, when it changes? Oh silly me..... Just raise the debt ceiling!!! I just had an AH-HA moment!!!