An independent study authorized by the Postal Regulatory Commission has found that the financially struggling US Postal Service has overpaid its Civil Service Retirement System benefits by at least $50 billion.
The PRC authorized The Segal Company, an actuarial and consulting firm, to prepare the report on possible USPS overcharges. The inquiry found that “an adjustment of $50 billion to $55 billion would be equitable.”
The Office of Personnel Management, which is responsible for calculating the USPS’ pension liability, must reconsider its calculation of the Postal Service’s pension assets in light of the report, according to the PRC. OPM must then submit those results to the PRC, the Postal Service and Congress, the PRC said.
The PRC also suggested that Congress could alter the schedule for potential transfers from the Postal Service Retirement Fund to its Retiree Health Benefit Fund.
The PRC is also studying the Postal Service’s proposed move to five-day-per-week home delivery as part of its plan to restore financial stability. The USPS saw a net loss of $642 million in May, and a net loss of $3.8 billion for its 2009 fiscal year, which ended September 30, 2009.
Joanne Veto, senior manager of PR and promotional communications at the Postal Service, said via e-mail that the PRC study confirms the USPS has overpaid its pension responsibilities.
“We hope Congress takes this report into consideration as it continues to debate our request to restructure prepayment for retiree health benefits as part of a series of actions the Postal Service has taken to address its current financial situation,” she said. “These include changing delivery frequency, expanding products and services to places more convenient to customers and greater flexibility to reflect a changing, dynamic marketplace.”
Sen. Tom Carper (D-DE) also lauded the report’s results in a statement.
“This discovery couldn’t have come at a better time, as the Postal Service is facing a serious financial crisis. In fact, the overpayment the Postal Regulatory Commission has identified represents less than 25% of the Postal Service’s projected long-term budget deficit,” he said. “That said, this is certainly a helpful development that will give Congress some assistance as we work to provide the Postal Service with much-needed relief from the overly aggressive retiree health funding scheduled that was placed on in 2006.”
The USPS said in January that its current system of funding its Civil Service Retirement System pension responsibility resulted in the agency overpaying by $75 billion from 1972 to 2009, according to its Office of Inspector General.
The issue has also become a political football. Ruth Goldway, PRC chairman, told members of Congress in April that they should fix the USPS’ retiree health benefit payment system before turning their attention to five-day delivery. Leaders of the two major postal unions have also stated that possible pension overpayments are the biggest financial hurdle the USPS faces.