Postal Service overfunding pensions, report says
The U.S. Postal Service is overpaying into its Federal Employees Retirement System because its employees’ circumstances differ from that of typical federal workers, according to a new report.
The audit, conducted by an actuarial firm contracted by the USPS inspector general, found that while the Office of Personnel Management assumed the average USPS salary increased by 4.11 percent from 2002-2010, it actually rose by only 2.77 percent to 3.41 percent, depending on the employee’s union. The firm also said postal workers reach the top level of their pay scale faster than other federal employees, leading to less salary growth than anticipated.
OPM calculates the percentage of salary employees governmentwide must pay into FERS, which is currently at 12.7 percent -- 0.8 percent of which is paid for by the employee and the rest by the agency. The IG’s report, however, said the gap between the salary growth at USPS and the rest of government has led to an unnecessary $11.4 billion surplus in pension funds.
Therefore, the auditors concluded, the share the Postal Service pays should be determined on agency-specific assumptions on salary growth.
A Postal Service spokesman told Federal Times -- which first reported the audit -- his agency endorsed the findings and OPM should allow USPS to stop overfunding its pensions.
“The Postal Service cannot afford to make pension contributions that are not necessary for future benefits,” the IG wrote in the report. The spokesman echoed the sentiment, saying the overfunding is contributing to agency’s financial difficulties.
OPM, however, told Federal Times the agency is legally obligated to make its FERS estimates based on governmentwide -- not agency-specific -- statistics.
This is not the first time USPS has voiced complaints about mandatory benefits funding. The agency has previously complained of the congressional mandate to prefund its retirees’ health benefits well into the future.