The U.S. Postal Service is paying more than its fair share into the Federal Employees Retirement System mainly because of inflated salary assumptions, according to a new analysis released Tuesday by the USPS inspector general.
The analysis, conducted by an actuarial firm working under contract for the IG, urges the Office of Personnel Management to calculate the Postal Service’s future FERS obligations differently.
Like other agencies, the Postal Service and its employees contribute a total of 12.7 percent of payroll into FERS. But from 2001 through 2010, OPM assumed average governmentwide salary growth of 4.11 percent per year, while the actual increases received by the Postal Service’s unionized workforce ranged from 2.77 percent to 3.41 percent annually. In addition, more than 70 percent of those employees have already reached the tops of their pay scales, increasing the likelihood that current assumptions “overstate future salary growth,” the report says.
As of September 2011, the Postal Service had an estimated $11.4 billion surplus with FERS.
“The Postal Service cannot afford to make pension contributions that are not necessary for future benefits,” the report says.
In a statement, Postal Service spokesman Dave Partenheimer endorsed the findings, saying that excessive FERS charges are contributing to the agency’s financial crisis. Besides re-estimating future pension obligations, he said, OPM should also adjust the contribution rate. That new rate should be whatever is needed to fund the Postal Service’s obligations, but not overfund them, he said.
By law, however, OPM must make its estimates based on government-wide numbers, said Jon Foley, OPM director of planning and policy analysis, in a statement released by a spokeswoman.
In fiscal 2011, the Postal Service paid about $3 billion into FERS, according to the report. Between June and December 2011, the agency suspended its share of contributions into the program to save cash, but then repaid the money.