Postal Service Wants to Withdraw from Federal Retirement Plan

August 11, 2011 ( - The U.S. Postal Service is seeking to withdraw its employees from the health and retirement plans that cover federal staffers and create its own benefit programs for postal employees.

The Washington Post reports that the USPS also wants to reduce its workforce by 20%, including through layoffs now prohibited by union contracts. These moves would need congressional approval and would face fierce opposition from postal unions.  

In a notice to employees informing them of its proposals, with the headline “Financial crisis calls for significant actions,” the Postal Service said “we will be insolvent next month due to significant declines in mail volume and retiree health benefit prefunding costs imposed by Congress,” according to the Post.  

A spokeswoman for Senator Thomas R. Carper (D-Delaware) said “he is particularly interested in learning whether these proposals would be fair to employees and effective in reducing the Postal Service’s costs.” Representative Darrell Issa (R-California), chairman of the House Oversight and Government Reform Committee, said: “These new ideas from the Postal Service are worth exploring. Options for reform and cost savings that will protect taxpayers from paying for a bailout, now or in the future, need to be on the table.”   

However, postal worker unions have said they will fight the proposals.  

The USPS has already suspended its contributions to the Federal Employees Retirement System (see Postal Service to Suspend Retirement Contributions).