USPS Pension And Health Liability Funding
Trying to make sense of the arguments around USPS funding of pension and health liabilities...
- Final Management Advisory Report – Estimates of Postal Service Liability for Retiree Health Care Benefits (Report Number ESS-MA-09-001(R)) - Jul'2009 ("OIG report")
In 2003, Congress passed legislation (P.L. 108-18) giving the Postal Service pension relief, because it was on track to overfund its Civil Service Retirement System (CSRS) Pension obligations. (1)
In December 2006, President Bush signed the (PAEA) Act into law. The new legislation required the Postal Service to prefund its retiree health benefits by paying an average of $5.6 billion per year for 10 years into a newly-created Department of Treasury fund: the Postal Service Retiree Health Benefits Fund (PSRHBF). (1)
- So that's saying they had been underfunding for a cumulative total of $56B.
- Actually, that's not true. Even after making those catch-up payments the PSRHBF wouldn't have been fully funded, though it would have been much closer.
The PSRHBF was initially funded with the calculated amount by which the Postal Service had already overfunded its CSRS liability ($17.1 billion) and the FY 2006 escrow payment ($3 billion). The Postal Service made the first of the 10 payments ($5.4 billion) on September 30, 2007, and its second payment ($5.6 billion) on September 30, 2008. It is scheduled to make a $5.4 billion payment on or before September 30, 2009. In FY 2008, the Postal Service recorded a net loss of $2.8 billion. Had it not been for the Act requirement to pay $5.6 billion into the PSRHBF at the end of FY 2008, the Postal Service would have had a net income of $2.8 billion dollars.
Edited: | Tweet this!