Audit Recommends Change to USPS Retirement Funding

October 18, 2012 ( – An audit report claims the U.S. Postal Service (USPS) is overpaying into the Federal Employee Retirement System (FERS) because its employees’ circumstances differ from that of other federal workers.

The audit, conducted by an actuarial firm contracted by the USPS inspector general, found that while the Office of Personnel Management (OPM) assumed the average USPS salary increased by 4.11% from 2002 to 2010, it actually rose by only 2.77% to 3.41%, depending on the employee’s union, Government Executive reported. 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 government-wide must pay into FERS, which is currently 12.7%0.8% of which is paid for by the employee and the rest by the agency, according to the news report. However, the report 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.  

The auditors concluded the share the Postal Service pays should be determined on agency-specific assumptions about salary growth.    

The Postal Service previously asked to withdraw from FERS and complained about the requirement to pre-fund other post employment benefits (OPEB) (see “USPS to Resume Retirement Payments in December”).