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The Postal Accountability and Enhancement Act of 2006 (Postal Act of 2006) requires the Postal Service to make payments of more than $5 billion annually through 2016 to prefund future retiree health benefits (RHB). Without changes to this prefunding requirement, the Postal Service currently projects it will have insufficient funds to make the required payment in September 2011, or subsequent required payments. Additional details are contained in the Annual Report.
Given its current financial situation, the Postal Service proposes to discontinue prefunding retiree health benefits. In 2010, independent analysts found that pension payments to the Civil Service Retirement System (CSRS) Fund have resulted in overpayments of $50 billion to $75 billion, which could be applied to the RHB Fund. The Postal Service could begin paying current retiree premiums from the RHB Fund.
The next step would be for Congress to provide direction to the Office of Personnel Management (OPM) to revise the methodology used to calculate the Postal Service’s share of CSRS overpayments.The Senate bill introduced in September by Senator Carper would modify the OPM methodology used to calculate CSRS obligations and transfer the surplus to the RHB fund.
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