Postal Service Pensions: Something to Write Home About

The U.S. Postal Service’s problems are many, with record-setting losses of $5.1 billion in fiscal year 2011 and legislators eyeing ways to cut waste to save the beleaguered Pony Express. Oversight Chairman Rep. Darrell Issa (R-Calif.) has taken the calamity under his wing, advocating five-day delivery and cutting more than a quarter of a million postal jobs to stay above water. Good-faith efforts to save the USPS are hampered by reports of waste and inefficiency, such as the postal regulatory chairman’s $70,000 travel bill.

One place the Postal Service apparently isn’t lacking is its pension funding. The Inspector General assured Sen. Bernie Sanders (I-Vt.) in a letter Monday that, in the words of Sanders’ office, a “big funding cushion” exists in the USPS retiree and health benefit fund, at rates exceeding other government agencies.

From Inspector David C. Williams’ letter:

“The Postal Service has significantly exceeded pension and retiree healthcare benchmarked funding levels of both public and private sector organizations. Using ratepayer funds, it has built a war chest of over $326 billion to address its future liabilities, prefunding combined pension and retiree healthcare obligations at 91 percent. This is an astonishingly high figure for a company with such a large employee base.

For example, the Postal Service is currently over 100 percent funded in its pension funds. The federal government is funded at a much lower 42 percent level, and the military is funded at 27 percent. The average Fortune 1000 pension plan is funded at 80 percent, and only 6 percent of the Fortune 1000 companies have pension plans that are 100 percent funded.”

At a press conference with Sens. Pat Leahy (D-Vt.) and Mary Landrieu (D-La.), Sanders said the post office should be released from what he called an “onerous and unprecedented burden” of being forced to put $5.5 billion every year into their future retiree health benefits fund. He advocated letting the fund sit and collect interest, and said the USPS should be able to recover its $13 billion-plus in federal pension overpayments.