Postal Service Faces $100B in Debts and Unfunded Benefits
March 14, 2014 – 4:23 PM
By Michael W. Chapman
(CNSNews.com) – The U.S. Postal Service (USPS) currently owes $99.8 billion in benefit payments to its current and retired workers but does not have the money, and if Congress does not act to fix the problem, the Postal Service may have to “implement contingency plans to ensure that mail delivery continues,” according to a new report by the Government Accountability Office (GAO).
“At the end of fiscal year 2013,” said the GAO, “USPS had about $100 billion in unfunded liabilities: $85 billion in unfunded liabilities for benefits, including retiree-health, pension, and workers’ compensation liabilities, and $15 billion in outstanding debt to the U.S. Treasury—the statutory limit.”
“USPS continues to be in a serious financial crisis, with insufficient revenue to cover its expenses and financial obligations, a continuing decline in profitable First-Class Mail volume, increasing unfunded benefit liabilities, and borrowing limitations due to having reached its $15 billion statutory debt [borrowing] limit,” said Frank Todisco, a GAO chief actuary, in prepared testimony before the House Subcommittee on Federal Workforce, U.S. Postal Service and the Census on Mar. 13. (See USPS Action Needed.pdf)
“Attention to USPS’s unfunded benefit liabilities is important, as they represent scheduled future benefit payments to current and retired employees for which USPS has not set aside sufficient money to pay,” said Todisco.
Those “unfunded benefit liabilities” refer to money owed for postal workers’ pensions, retirees’ health care and workers’ compensation. It also includes some outstanding debt.
According to the GAO report, the USPS at the end of 2013 had about $100 billion ($99.8 billion) in unfunded liabilities. These scheduled payments to current and retired workers included the following:
$48.3 billion, retiree health care
$17.2 billion, workers’ compensation
$19.8 billion, federal pension plan for workers hired before 1984
$500 million, federal pension plan for workers hired after 1984
$15 billion, outstanding debt
According to the GAO, “these unfunded liabilities have increased by 62 percent since fiscal year 2007.”
In 2007, the unfunded liabilities were $61.6 billion, and at the end of 2013 they had grown to $99.8 billion.
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There used to be smoke signals, the Pony Express, and telegraphs. These modes of communication were eventually phased out due to advances in communications technology. It’s high time that we gutted this out-dated service, but being the political third-rail that it is, the taxpayers will likely have to bail it out, and then we can continue getting our “mail” that mostly goes straight into recycling.
Union employees. that’s the problem.
It’s more than union pressure, but yes, that is a big part of the issue. The bigger issue are all the mostly older voters who squeal like little piggies to their representatives whenever there’s a suggestion that their little post office might get closed, or God forbid, they don’t get their junk mail on a Saturday.
Congress is a major part of the problem, if nothing else get rid of saturday mail delivery it is not needed.
James, how much “paid for” sales mail is sent for Saturday delivery?
I have no objection to getting these sales letters on Saturdays. It seems reasonable …….. to me and others.
There is a limit to what someone can be paid to perform a task.
I like all of the mail carriers and they are all pleasant.
Is that job worth what they are paid plus health and retirement benefits?
The cost of postage to pay for the labor is putting the PO out of business.
As the price of postage climbed years ago, I put most of my monthly bills on a single credit card, so one stamp was needed instead of 30.
I could pay that bill for free via online banking.
The post office, with its bureaucracy, has failed to embrace cost saving measures.
If there was any organization that could benefit from electric, natural gas, or hydrogen vehicles, its the USPS. But the dummies still use gasoline.
Its time to let FedEx or UPS compete, do a better job, and do it cheaper.
Most of what I get in the mail go straight to recycling. All of my Saturday mail goes to recycling.
Who is going to pay for the postal worker retirement benefits? Who is going to pay for NJ underfunded pensions? I am trying to save for my own retirement and I cannot afford cadillac plans.
And why is is a public employee can retire at age 45 and immediately begin collecting a pension? These people work for 20 years and collect a full pension for 40. Someone fix the system. No one should begin receiving payments till age 62. Retire if you want, but no pension till age 62.
Agreed #7. The average retirement age for our public safety employees is 52. They get 65% of their final comp (including 10% longetivity pay), plus six months of sick leave at their final comp rate, when they retire after 25 years. For that they immediately get virtually free Cadillac health coverage, a defined benefit pension for life, and the ability to “double dip” on other public sector jobs. Taxpayers foot the entire bill, and make up any difference if the pension fund becomes insolvent. We also have a $60bn unfunded healthcare liability in NJ alone because we pay for the cost of the healthcare as the bills are incurred. So much to look forward to as the number of Village retirees earning +$100K annual pensions jumps from 8 today, to over 30 by 2016 when the 65% pension falls to 60%.
Yes #7 you are right.
The average retirement age for our part-time BoE employees is 60. When teachers retire they get 55% of their final pay, plus six months of sick leave pay when they retire after working a part-time job for 30 years. They also get a Gold plated Cadillac health care plan, dental coverage, a defined benefit pension for life, and the ability to “double dip” on other public sector jobs.
Taxpayers foot the entire bill, and make up any difference if the pension fund becomes insolvent. We also have a $60bn unfunded healthcare liability in NJ alone because we pay for the cost of the healthcare as the bills are incurred. So much to look forward to as the number of Village Part -Time Teachers +$100K annual pensions jumps from 4 today, to over 50 by 2018.