GAO Finds No Pension Overpayments by Postal Service

October 14, 2011 (PLANSPONSOR.com) – The Government Accountability Office (GAO) says it has not found evidence of errors that could have caused the U.S. Postal Service (USPS) to make overpayments to the Civil Service Retirement System (CSRS).

The GAO concluded that the current methodology used by the Office of Personnel Management (OPM) for allocating responsibility for CSRS benefits between USPS and the federal government is consistent with applicable law. The Postal Service contends it has overpaid the retirement account by $6.9 billion and has asked Congress to pass legislation to return that money (see Postal Service to Suspend Retirement Contributions).  

According to the GAO’s report, the key impacts of transferring assets out of the CSRS fund to USPS based on the current proposals would be to increase the federal government’s current and future unfunded pension liability by an estimated $56 billion to $85 billion. This liability would then be funded by the federal government using tax revenue, borrowing, or both.   

Also, CSRS beneficiaries would continue to receive their benefits under current law, even if the federal government’s unfunded CSRS liability increases, but this could indirectly create pressure to reduce pension benefits. Furthermore, legislation would be required for the CSRS funds transferred under the recommendations in the Postal Regulatory Commission (PRC) and USPS Office of Inspector General (OIG) reports to be used by USPS for purposes other than funding the Postal Service Retiree Health Benefits Fund.   

Any change in the USPS’s share of responsibility for CSRS benefits would provide some temporary relief from the pressures USPS faces because of declining volume, revenue, and inflexible costs, but would not by itself address USPS’s long-term financial outlook. Such a transfer of CSRS funds would not be sufficient to repay all of USPS’s debt and address current and future operating deficits related to USPS’s inability to cut costs quickly enough to match declining mail volume and revenue.  

The GAO report can be downloaded from http://www.gao.gov/products/GAO-12-146.

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