Study: USPS overcharged $75 billion for pension fund
January 21, 2010
The US Postal Service was overcharged $75 billion for payments to the Civil Service Retirement System pension fund between 1972 and 2009, according to a new study released by the Postal Service’s Office of Inspector General.The Inspector General estimates that if the overcharge were used to prepay the Postal Services health benefits fund, it would fully meet any retiree health care liabilities and eliminate the need for required annual payments into the fund of more than $5 billion.
These annual payments have been an ongoing source of financial pain for the Postal Service at a time when it is under significant financial pressure from other sources, such as declining mail volume. The USPS reported a net loss of $3.8 billion for its 2009 fiscal year and has been considering closing post offices and shortening the delivery week as a way to cut costs. Last year, Congress passed a bill to allow the USPS to delay $4 billion of its annual payments into the retirees’ health benefits fund.
In the study, an analysis conducted by the Inspector General’s office and Hay Group demonstrates the method used to determine how the Civil Service Retirement System pension fund costs are split between the Postal Service and the federal government is inequitable. As a result, the Postal Service was overcharged by $75 billion for payments covering retirees from 1972 to 2009.
Posted by Chantal Tode on January 21, 2010