https://www.heritage.org/social-security/report/postal-pension-refund-disguised-taxpayer-bailoutArticle on this issue in 2012, long BEFORE Trump and long before USPS carrying Amazon packages
"Postal Pension “Refund†Is a Disguised Taxpayer Bailout | June 12, 2012
David John
Former Senior Research Fellow in Retirement Security and Financial Institutions
David is a former Senior Research Fellow in Retirement Security and Financial Institutions.
Abstract: Calls to refund “overpayments†by the U.S. Postal Service (USPS) to the retirement of postal workers are misguided. The estimates of overpayments are inflated by overly optimistic assumptions, as recent years have demonstrated. A refund would leave taxpayers on the hook for future shortfalls in USPS retirement funding. The better choice is to follow the private-sector practice of using the current surplus—whatever it is—to defray future retirement payments. Instead of giving the USPS a questionable refund, Congress should require it to make comprehensive reforms that recognize new realities and enable it to restructure its operations accordingly.
With the U.S. Postal Service (USPS) nearly out of funds, a chorus of voices in Washington, including the USPS itself, are saying that the government-owned enterprise is owed a refund for the billions of dollars of supposed overpayments of its retirement obligations. Some even claim that these “accounting errors†are the primary cause of the USPS’s financial distress, rather than any fundamental change in the business of mail.
These arguments are fundamentally wrong. Providing refunds to the USPS would not only allow it to postpone vitally needed reforms, but leave taxpayers on the hook for future shortfalls in the USPS pension fund if it cannot meet its obligations.
USPS Retirement Funding
The debate over postal retirement funding involves three systems: the Civil Service Retirement System, the Federal Employees Retirement System, and the Retiree Health Benefits Fund. Each of these involves distinct issues:
-The USPS claims that it overfunded its share of the newer Federal Employees Retirement System (FERS) by $11.4 billion. While some level of surplus exists, the estimate of $11.4 billion is based on overly optimistic assumptions. Rather than refunding the amount, FERS should retain that surplus and use it to offset future USPS payments. If the USPS receives the refund it wants as provided by postal reform bills pending in Congress, the retirement plan would likely become seriously underfunded when economic conditions change, and taxpayers would be forced to make up the difference.
-Similarly, the USPS has advanced the myth that an unfair and incorrect pension funding formula has forced it to overpay the old Civil Service Retirement System (CSRS) by as much as $75 billion. The USPS is wrong. The funding formula was set by law more than 40 years ago, and both the Government Accountability Office (GAO) and the Office of Personnel Management (OPM) have firmly rejected the USPS claims.
-Lastly, the USPS is disputing its contributions to the Retiree Health Benefits Fund. In 2006, Congress required the USPS to fully fund future retiree health benefits through a series of payments over 10 years on a pay-as-you-go basis. As with the other funds, prefunding these promised benefits is essential to protect taxpayers from the dangers of a shortfall.
The USPS Retirement System
When Congress created the USPS out of the old Post Office Department in 1971, the federal employees of the Post Office became employees of an independent self-funding entity. By law, both those employees and all of those hired since the creation of the USPS have been part of the federal retirement system. USPS employees receive a pension that is calculated using the same formula that is used to calculate the pensions of federal employees, and they are paid by the same fund, the federal Civil Service Retirement and Disability Fund (CSRDF). This means that USPS retirees will receive a pension regardless of whether or not the USPS funds it. If the USPS fails to provide the funds, the taxpayers will pay for the pensions of USPS employees.
USPS employees first hired before 1984, including any transferred from the Post Office Department, are also part of the Civil Service Retirement System (CSRS). This pension system pays a traditional defined benefit[1] based on the worker’s highest three years of earnings. The formula is graduated so that, the longer the individual is employed, the higher the proportion of income that is used to calculate their pensions. In general, CSRS employees do not pay Social Security taxes or receive Social Security benefits.
Since 1984, both federal and USPS employees have been part of the Federal Employees Retirement System (FERS), a three-part plan that includes Social Security, a retirement savings system similar to a private 401(k) plan, and a fairly small defined-benefit pension. In addition to the USPS contributions to the CSRDF for the defined-benefit pension, it also matches employees’ retirement savings up to a set maximum.
The USPS funds the defined-benefit portions of both pension plans with an annual contribution equal to the amount of additional benefits its employees earned that year. These contributions are invested in special issue treasury bonds that pay interest. The USPS uses a formula developed by CSRDF actuaries to calculate the size of its contribution. If the USPS were to delay its payment, it would still be financially responsible for both the initial payment and any interest earnings lost because of the delay. In short, delay would only increase the USPS’s pension costs."
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#nevertrumpers are soooo obsessed with everything being about Trump. Truth is this issue is not new. What is new is a leader that steps up and does something, instead of letting it go on forever, unresolved, like government business as usual.
On Tuesdays, #nevertrumpers are cost-accountants /s
