President Louis M. Atkins regarding the USPS’ termination of their payments into FERS

June 22, 2011 — The U.S. Postal Service announced on June 22 that it immediately will suspend its bi-weekly contributions to the Office of Personnel Management (OPM) for Federal Employees Retirement System (FERS) benefits, citing overpayment of its FERS obligations by enough of a margin to where a nearly $7 billion surplus currently exists.

For months the Postal Service has indicated that its worsening financial condition will put at risk its ability to satisfy a series of financial obligations, including a statutorily-required advance payment of $5.5 billion in late September for future retiree health benefits along with fulfilling other basic operating expenditures. The termination of the FERS payments is the first in a series of last-ditch efforts by the USPS to remain financially solvent.

The National Association of Postal Service believes the Postal Service’s actions underscore the critical need for Congress to address the Postal Service’s pension surpluses in both CRS and FERS. Surpluses as large as $75 billion in CSRS and $7 billion in FERS may exist.

While the legality of the Postal Service’s action is unclear, USPS and OPM have agreed to seek legal review through the Office of Legal Counsel at the Department of Justice. If the Postal Service has erred, it will make the necessary catch-up payments.

In the meantime, OPM and USPS will continue to award full service credit for employees retiring from the Postal Service, regardless of the state of USPS-employer contributions to FERS. NAPS will continue to work to assure that the interests of its members and their retirement benefits are fully protected.

6-23-2011 Atkins Statement on FERS

Congressman Darrell Issa has introduced his promised postal “reform” bill. Issa’s legislation would create a BRAC-like commission to determine which post offices, processing plants, and administrative offices should be closed down. The most far reaching provision, however, is the creation of a control board which would take control of the USPS if it defaults on any obligation to the federal government. The control board would have the power to remove officers and managers, and to rewrite existing collective bargaining agreements as needed to “achieve specific economic savings and workforce flexibility goals”.

It would, in effect, use the Congressionally mandated, arbitrary PAEA trust fund mandates as a pretext to place the USPS in receivership. Without the trust fund payments, the USPS would be in reasonable financial shape (and virtually debt free), given the poor economic climate.

Here is the press release issued by Issa’s office:

WASHINGTON, D.C. – Seeking to prevent another taxpayer bailout, Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, introduced today legislation to implement sweeping, structural reforms of the United States Postal Service (USPS). The legislation represents the most fundamental reform of the postal service that has been proposed since USPS was first created from the old Post Office Department.

“The Postal Service lost $8.5 billion last year. It is going to lose, at least, $8.3 billion this year. And it is projected to lose $8.5 billion the year after that,” Issa said. “Congress can’t keep kicking the can down the road on out of control labor costs and excess infrastructure of USPS and needs to implement reforms that aren’t a multi-billion dollar taxpayer funded bailout.” Read the rest of this entry »

Members of Parliament could be in for a long night, and possibly weekend, of debating the controversial back-to-work bill designed to end the Canada Post labour dispute.

The Conservatives are hoping to pass the bill as soon as possible, so that postal deliveries can resume next week and MPs can begin their summer break.

The NDP, however, has vowed to delay the bill as long as possible in hopes the two sides can work out their own deal.

Read the full story: Delays on back-to-work bill could keep MPs in Ottawa – CTV News.

Yesterday, USPS said it’s suspending the employer’s contributions for the defined benefit portion of the Federal Employees Retirement System, or FERS (Link EXTRA, 6/22). The Postal Service said it was taking this step to conserve cash and preserve liquidity.

Today, PMG Pat Donahoe — in a video message to employees — says the suspension will not affect them. Noting that USPS has a surplus of $6.9 billion in payments to FERS, he says “We simply are stopping this ongoing overpayment toward the annuity FERS retirees receive because we have already met that obligation.”

Donahoe says the suspension is “only a stop-gap measure,” adding Congress must approve legislation that can help the Postal Service return to profitability. As he has in the past, the PMG urges Congress to eliminate the requirement for pre-payments to the retiree health benefits fund; grant USPS access to the FERS overpayment; and give the Postal Service flexibility to determine the frequency of mail delivery.

via USPS News Link – June 23, 2011.

Video from WNEP – Scranton: A letter carrier tackled an accused burgler on East South Street in Wilkes-Barre

The National League of Postmasters has provided the following presentation detailng the hiring process for Postal Support Employees under the new APWU contract:

League of Postmasters PSE Presentation

June 22, 2011 — The Postal Service announced on June 22 that it is suspending its bi-weekly contributions to the Office of Personnel Management (OPM) for Federal Employees Retirement System (FERS) benefits (11.7% of basic pay), because its FERS account within the government-wide pension plan has a large surplus, and because it would like to preserve its cash reserves in the face of worsening economic conditions. Earlier this year, the Postmaster General announced that the USPS would not be able to make the $5.5 billion retiree health pre-funding payment scheduled for Sept. 30, 2011, and called on Congress to enact postal reform to avert a funding crisis that will occur when the USPS exhausts its $15 billion debt limit early next year.

Read the rest of this entry »

WASHINGTON – Today, Sen. Tom Carper (D-Del.), chairman of the subcommittee with jurisdiction over the U.S. Postal Service, released the following statement reacting to the Postal Service’s decision to suspend its Federal Employees Retirement Systems (FERS) payments:

"Today’s drastic action by the U.S. Postal Service underscores the urgent need for Congress and the Administration to act quickly to address the serious financial problems facing the Postal Service. In essence, this is the canary in the coal mine moment for the Postal Service. If we don’t heed this warning and act quickly, the Postal Service as we know it will cease to exist in the very near future, possibly by the end of this fiscal year. This would effectively shut down the U.S. mailing industry that depends on the Postal Service. A shutdown of an industry of its magnitude, with some 7 million employees and more than $1 trillion in revenue every year, would be catastrophic to our fragile economic recovery.

"It’s estimated that the Postal Service has overfunded its obligations to the Federal Employees Retirement Systems (FERS) by about $7 billion. The Postal Service’s decision to suspend payments to FERS is just one painful step of many that may be necessary to help keep the Postal Service solvent in the short term. It will not, however, fix all that ails the Postal Service.

"Earlier this year I introduced comprehensive legislation, the POST Act, to address the significant challenges facing the Postal Service and to put the Service back on a solid financial path. We need to move quickly on this effective and comprehensive legislation before it’s too late. My bill requires all parties – postal management, employees, customers, and the Postal Service’s competitors – to make sacrifices to ensure the solvency of the Postal Service over the long term.

"It also gets Congress out of the way by providing the flexibility and tools necessary to address the problems plaguing the Postal Service in an effective way. One of the reasons why the Postal Service finds itself in this precarious financial state is that for decades it’s overpaid into not only FERS, but also to the older Civil Service Retirement System (CSRS), totaling between $50 billion and $75 billion. Currently, it is unlawful for the Postal Service to use these overpayments to meet other overall Postal Service expenses. My bill would change that.

"I’d like to thank the Obama Administration for working with the Postal Service to take this difficult short-term action without threatening postal employees’ pension eligibility. I urge the Administration to deepen its cooperation with the Postal Service and Congress in the coming days to help us find a long-term solution to ensure the Postal Service’s survival. Despite the dire fiscal outlook, there is hope for the Postal Service’s future. We can turn things around by quickly passing comprehensive legislation, such as the one I’ve proposed, that would give the Postal Service the room it needs to manage itself and avoid it becoming the latest victim of Congressional gridlock."

via Press Releases – Newsroom – Tom Carper, U.S. Senator for Delaware.

The US Postal Service is facing serious challenges. OPM is sympathetic to the situation in which the Postal Service finds itself, and we stand ready to help the Postal Service in whatever way we can, consistent with our legal obligations and role as the fiduciary for the Retirement and Disability Trust Fund (the Fund).

There is currently a surplus in the portion of the Fund covering Postal Service employees. The Postal Service’s position is that, in light of this surplus, it should be permitted to suspend making Federal Employees’ Retirement System (FERS) annuity contributions. We understand that, based on this position, the Postal Service intends to cease making further FERS annuity contributions effective June 24, 2011.

Both the Postal Service and OPM have agreed to seek a resolution of the important legal issues surrounding the Postal Services’ decisions by submitting a request for a legal opinion to the Office of Legal Counsel (OLC) at the Department of Justice.

Our aim is to protect the Postal Service employees to the greatest extent possible under the law. We have thus determined that while these issues are pending with OLC, we will be able to continue to give employees who retire credit for service rendered after the Postal Service ceases making FERS annuity contributions on June 24.

This determination is supported by the Postal Service’s assurance it will make the FERS annuity contributions it is now ceasing if OLC disagrees with its position. This means that there will be no negative impact on future postal employees’ retirement. Current postal retirees will not be impacted at all. It is our most fervent hope that the issue is resolved as quickly as the law allows.

via Statement by U.S. Office of Personnel Management On Postal Service’s Decision to Suspend FERS Annuity Contributions.

CNN manages to confuse two major financial issues in its story on today’s USPS announcement on retirement funding. A story on the network’s web site reports incorrectly that the USPS announced it was cutting off payments to the future retiree health benefit trust fund:

For the first time, the U.S. Postal Service will ignore a federal requirement and stop making prepayments to its health care retirement fund in a bid to ward off insolvency.

The Postmaster General did announce several months ago that the USPS would not make its required annual $5.5 billion payment into the trust fund- but that payment isn’t due until September 30. What the USPS announced today was that it would stop making regular biweekly payments into the Federal Employee Retirement System (FERS). The agency’s FERS account already has a surplus of $6.9 billion, so the cutoff has no impact on actual payments to retirees.

via Postal Service to skip mandated retiree fund prepayments – Jun. 22, 2011.