STUDY FINDS USPS WAY OVERPAID PENSION FUND

The U.S. Postal Service was Overcharged by $75 Billion for payments to Civil Service Retirement System (CSRS) retirees from 1972-2009, according to a study released in January by the Office of Inspector General (OIG).

The current system of funding the Postal Service’s CSRS pension coffers is inequitable and has resulted in the USPS overpaying, the study says. The OIG estimates that if the overcharge were used to prepay the Postal Service’s health benefits fund, it could fully meet all of the USPS’s accrued retiree health care liabilities and eliminate the need for the required annual payments of more than $5 billion.

What’s more, the health benefits fund could immediately start meeting its intended purpose — paying the annual payment for current retirees, which was $2 billion in 2009, the report shows.

“We believe the report to be a balanced and fair analysis of a critical issue,” says USPS spokesperson Gerald J. McKiernan. “We hope it receives further consideration from all of our stakeholders as we address the important goal of returning the Postal Service to financial stability.”

In the report, conducted by the OIG and management consulting firm Hay Group, analysis reveals that the method used to determine how CSRS pension costs for postal employees with service before 1971 are split between the Postal Service and the federal government is inequitable. That resulted in the $75 billion overpayment on behalf of CSRS retirees for the 27-year period.

This marks the third time that the Postal Service has been overcharged, the study says. It was determined in 2002 that the USPS would overfund CSRS by $78 billion. Legislation in 2003 corrected this discrepancy.

Then it was found that the Postal Service was overcharged $27 billion for CSRS military service credits. These funds were returned to the USPS by Congress in 2006; the surplus was used to fund retiree health care liabilities.

The study also shows that the CSRS pension fund is now underfunded by $10 billion. So the resulting pension surplus would equal $65 billion. The $65 billion surplus could be added to $35 billion already set aside in the retiree health benefits fund for a total fund balance of $100 billion.