Passing the legislation would allow the Postal Service to free up extra funds to reduce the service’s debt and keep first-class stamp rates steady at 37 cents until 2006. The Senate passed an identical bill last week, which is supported by the Bush administration, according to a Wall Street Journal report.
The change was proposed following a US Treasury Department audit revealing that the Postal Service has nearly paid off obligations for some current and future retirees, bringing liabilities on this retirement account down to an estimated $5 billion, as opposed to the previous $32 billion estimate (See Post Office “Delivers” Extra Pension Funds ).
Under the proposed amendments, the Postal Service would be able to reduce contributions for workers in the Civil Service Retirement System fund, currently used to provide benefits for employees who joined the service before 1983. Allowing the agency to make the smaller contributions would then free up enough extra funds to reduce the Postal Service’s debt by $2.9 billion by the end of the fiscal year.
But legislation bogged down over concerns on how the post office would use the extra funds. T o end the Congressional logjam, the bill requires the Postal Service to steer all the expected savings through fiscal 2005 to debt reduction and postponing rate increases. The savings also cannot be counted toward bonuses for postal executives, and Congress still would have to approve the agency’s plans for using any additional funds after 2005.
Postal service employees hired after 1983 are on a different retirement plan. Current contributions and future benefits will not be affected by the change.