US - The US Postal Service (USPS) could use at least $5.5bn in pension fund overpayments to address its financial concerns, according to a new audit.
In a report into its over-funding, USPS found a $6.8bn surplus in contributions to the Federal Employees Retirement System was hindering its ability to operate efficiently.
USPS deputy assistant inspector general for financial accountability and report author John Cihota wrote: "This report is one in a series of reports that describes the unsettling trend of the Postal Service paying more than its fair share of retiree benefit payments owed to the federal government.
The Postal Service's over-funding issue is even larger than we previously reported. It is important that the trend of overpayments does not continue. The Postal Service faces a challenging future and its responsibilities and the true cost of funding postal operations needs to be absolutely clear.
"[It has] opportunities to use at least $5.5bn of the $6.8bn in FERS surplus funds to address its current and future financial condition."
USPS has more than 500,000 employees enrolled in FERS and has contributed $3bn to the fund in fiscal 2009. The agency met 99% of its contribution requirement last year, while the federal government paid just 41% of its share, said the report.
It said variables such as sick leave credit, mortality estimates and future return rates are critical to calculating FERS funding obligations and determining how much of the $6.8bn surplus could be used to address other financial issues.
It also recommended the Postal Service pursue legislative action to adjust its funding requirements until the FERS surplus is reduced. In addition, the Office of Personnel Management should establish a sub-account for USPS' retiree benefits contributions to increase transparency. These moves would increase cash flow, help the agency cover its expenses and bring its pension funds in line with the private sector, it added.
The Postal Service has a history of pensions overpayments. Earlier this year USPS inspector general David Williams reported that USPS overpaid its Civil Service Retirement System account by $75bn as a result of a misinterpretation of a 1974 law regulating pension funding. In addition, a 2009 audit found a $13.2bn overpayment for retiree health benefits.
USPS said it will address these concerns by September 30.
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