Attentive (and we mean really attentive) Fedline readers might remember a post from last month about the apparent disconnect of the Office of Personnel Management’s charging the U.S. Postal Service more for its current pension contributions at the same time the Obama administration is proposing a big refund to the Postal Service on past contributions. We’d asked OPM for comment and finally received an answer yesterday. So, in the interest of thoroughness, we’re rerunning the original Feb. 22 post, with the OPM response appended verbatim.
Here’s an intriguing nugget from the U.S. Postal Service’s latest quarterly report: Even as the Obama administration agrees that the Postal Service is owed a huge refund on past payments to its pension program, the Office of Personnel Management—headed by Obama appointee John Berry—is requiring it to shell out more for current payments.
For the first quarter of fiscal 2011, the Postal Service’s contributions to the Federal Employees Retirement System, or FERS, rose by $24 million—from $1,469 million to $1,493 million—versus the same period in fiscal 2010, even though the USPS workforce continued to shrink, the report says. The reason, according to the Postal Service, is that its employer contribution rate increased from 11.2 percent to 11.7 percent of eligible payroll. The agency is appealing that boost to a federal board of actuaries on the grounds that its FERS obligation is already overfunded to the tune of some $6.9 billion.
In its newly released 2012 budget request, the White House proposed refunding the Postal Service that money over 30 years, starting with a $550 million down payment this year.
At least to non-actuarial minds, it seems contradictory to be giving with one hand and taking away with the other. In an email, OPM spokeswoman Brittney Manchester offered the following explanation:
“Under current law, the Postal FERS ongoing contributions and the Postal FERS surplus are subject to different provisions of law that are independent of each other. Without specific legal authority, the Office of Personnel Management cannot make adjustments to Postal’s ongoing contributions despite the fact that there is a surplus in the retirement fund attributable to Postal employees.
“The October 1, 2010, increase in the FERS employer contribution rate applied not just to the Postal Service, but to all other agencies as well. Under FERS, all agencies pay the same contribution rate. Different provisions apply to the overall funding situation. Retirement funding is a long-term matter, and estimates have to be made covering economic and other factors that are many years distant. Over the past quarter century, Postal Service FERS funding has grown gradually to exceed projected future liabilities by approximately $6.9 billion.”
“The President’s 2012 Budget provides short-term financial relief through a sensible and fair restructuring of key retiree liabilities, while seeking to work with Congress and stakeholders to secure needed reforms to modernize its business model.”