The initial seed money would lay the foundation for a health benefit retirement program estimated to cost more than $40 billion, the post office’s chief financial officer projects. However, before the plan can be enacted it must first pass the General Accounting Office (GAO) scrutiny, with the US Congress expected to take action on the efforts within six months after the GAO issues its report.
The surplus stems from 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 ).
This allowed for the Postal Service to reduce contributions for workers in the Civil Service Retirement System fund, 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.
After a Congressional logjam earlier this year (See Retirement Plan Contributions Could Lead to Postage Increase ), a bill was passed that required 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, leading to the Postal Service’s latest proposal.
However, the nation’s mail carriers said the plan is only feasible provided Congress relieves it of its obligation to pay more than $27 billion in military pensions for its employees. The Postal Service is the only agency required to pay military pensions for its own employees. If that burden is not lifted, then the Postal Service plans on using the extra cash to pay into retirement funds for employees hired after 2002.