The U.S Postal Service this week will suspend payments to its Federal Employees Retirement System account, officials said Wednesday.
In the face of financial insolvency, the Postal Service on June 24 will halt employer contributions to the FERS defined benefit plan, which the agency estimates will free up $800 million in cash this fiscal year. USPS lost $2.6 billion in the first half of fiscal 2011 and expects to be down $8 billion by the end of the year.
According to the Office of Personnel Management, postal employees will continue to receive service credit toward their annuities while payments are suspended, and neither current nor future retirees will be negatively affected. Workers still will be able to contribute to FERS, USPS officials said.
"We will continue to transmit to OPM employees' contributions to FERS and also will continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan," USPS Chief Human Resources Officer and Executive Vice President Anthony Vegliante said in a statement.
According to USPS spokesman David Partenheimer, the suspension does not have a definite end date. The agency had to take action to keep the mail moving, but it is not a permanent solution, he said.
USPS already has overpaid its FERS account by nearly $7 billion and estimates it has a $75 billion surplus in its Civil Service Retirement System fund. Officials continue to request legislative changes to bring the agency back to financial health, such as the flexibility to cut Saturday delivery, adjust the size of the workforce and end an obligation to prefund retiree health benefits at $5.5 billion annually.
Lawmakers noted the suspension will not fix the Postal Service's financial concerns.
Sen. Tom Carper, D-Del., called the move "one painful step of many" that may keep USPS afloat in the short term, but he cautioned more must be done to help the agency improve its finances.
"The U.S. Postal Service, our nation's second-largest employer, is now past the brink of insolvency," said Rep. Darrell Issa, R-Calif. "This would not be tolerated in a private company. Incredibly, the unprecedented action to suspend these payments will only offer USPS an additional $800 million through the end of the year in liquidity, not even 10 percent of their projected deficit of $8.3 billion."