Postal Service suspends benefits payments to save $800M in FY 2011
USPS at work
The US Postal Service said June 22 that it will suspend its benefits contributions to the Federal Employees Retirement System (FERS) to preserve liquidity through the rest of its fiscal year. The Postal Service said it expects to save about $800 million by the September 30 close of its 2011 fiscal year.
The USPS said it pays about $115 million every other week to the Office of Personnel Management to fund the annuity. The organization said it has a FERS surplus of $6.9 billion.
“We are facing a liquidity crisis, so by taking this action, we are making sure that at the end of this fiscal year we are paying employees and suppliers,” said Dave Partenheimer, acting manager of media relations at the USPS. “The goal is to keep the mail moving.”
He added that the move will not affect employees or retirees, and that the USPS “realizes this is not a long-term solution.”
The USPS, which saw a net loss of $8.5 billion in FY 2010, has warned that it could run out of money by the end of this fiscal year. It has also urged Congress to take legislative action to reform its retiree health benefit prepayment system, which costs the organization more than $5 billion per year.
The Postal Service has also asked Congress to allow it to cut Saturday home delivery, which it said would save the organization about $3 billion annually. Sen. Tom Carper (D-Del.) introduced a bill in May that would allow the USPS to move to five-day home delivery, reform its benefits payment system, and close post offices as it sees fit.