U.S. Postal Service stops pension contributions
By Hazel Bradford | June 22, 2011 3:46 pm
The U.S. Postal Service on Wednesday said it would stop making its $115 million biweekly payments into the defined benefit portion of the Federal Employees Retirement System on Friday, citing $6.9 billion USPS overpaid in contributions to date.
The USPS informed the Office of Personnel Management that it would halt the contributions but said employee contributions to FERS and its $264 billion Thrift Savings Plan, both in Washington, will continue.
The move, approved by the Postal Service Board of Governors in a closed session this week, will free up $800 million to help ease a liquidity crisis. USPS is expecting to finish its fiscal year, which ends Sept. 30, with an $8.3 billion revenue loss.
USPS finances have been hampered by prefunding mandates for retiree health care, including a $5.5 billion payment due in September, and the FERS contributions.
FERS and its predecessor DB plan, the Civil Service Retirement System, are 52% funded, with total combined assets of $764.8 billion, but the Postal Service portion of those plans is 99% funded at $273.6 billion, according to a 2009 USPS Office of Inspector General report.
“We're not shirking our responsibility. We're simply running out of cash,” said USPS spokesman David Partenheimer in an interview. “This was an emergency measure to preserve cash so we can pay our employees and our vendors. Our goal is to keep the mail moving.”
Mr. Partenheimer said the decision will be reviewed by the Department of Justice. “Regardless of the outcome, we believe there will not be any impact on our employees or retirees,” he said.
OPM “is sympathetic to the situation,” according to an OPM statement released Wednesday, and agreed there would be no negative impact from USPS halting contributions on current or future retirees.