Federal Daily News
IG report says USPS overpaid billions into pension fund
The U.S. Postal Service Office of Inspector General is recommending that USPS continue to pursue legislation that would require the refund of pension surpluses to the financially strapped organization.
According to an IG audit report dated June 16, USPS at of the end of fiscal 2011 had funded its pension benefit obligations at nearly 105 percent, resulting in a $13.1 billion surplus—funds that could help USPS address its ongoing financial losses.
Unions have argued that USPS overpayments into its pension funds—as well the statutory requirement that USPS pre-fund its retiree health care benefits—have contributed in large part to the Postal Service’s financial ills.
The IG, USPS, postal unions and lawmakers alike have issued various calls to change the law either to allow the Office of Personnel Management to alter the pension contribution formula for the Postal Service, to allow OPM to refund surpluses, or both.
The IG report noted that USPS, in addition to over-funding its pension obligations, has funded nearly 50 percent of its health care pre-funding obligation—$44.1 billion of a $90.3 billion future obligation.
“One of the greatest opportunities for cost savings has been the over-funded pension plan,” the report notes, “including the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), and the pre-funding of retiree health care benefits.” The IG noted it already has issued seven reports exploring the matter.
The IG report recommended that “management pursue legislative action to refund current and future pension surpluses to the Postal Service.” According to the report, USPS management agreed with the recommendation, and indicated it would continue to pursue legislation to address both the FERS surplus and the health care pre-funding issue.