August 18, 2022

Post Office to Stop Payments to Retirement Fund

WASHINGTON — To stave off insolvency, the Postal Service will discontinue legally required payments to its employees’ retirement fund on Friday, the agency announced Wednesday.

The announcement said that the post office hoped to save $800 million this fiscal year by stopping its payments to the Federal Employees Retirement System, which are $115 million every two weeks. Employee contributions from salary deductions will continue to be forwarded to the retirement fund.

The move will not affect pension payments for current retirees, according to a statement Wednesday from the Office of Personnel Management, which administers government retirement plans.

Federal terms have caused the service to overpay the fund, resulting in a $6.9 billion surplus, officials said. By suspending the payments, the money could be used to pay other bills.

“We need this cash throughout the rest of the year,” said Anthony Vegliante, the post office’s chief human resources officer, in a phone interview.

As the use of first-class mail has plummeted and budgetary woes have intensified in the past four years, the post office has responded by cutting about 110,000 workers and about $12 billion in costs, according to the statement. But the agency still expects a shortfall of more than $8 billion this year.

Mr. Vegliante said Congress needed to deal with the agency’s outdated business model and federal restrictions on its ability to manage itself. “Inside the Beltway, it’s the eternal debate,” he said. “We need action, not dialogue.”

House oversight committee leaders on both sides of the aisle agreed.

Representative Dennis Ross, Republican of Florida and chairman of the House oversight subcommittee on the federal work force, said in a statement Wednesday that Congress needed to approve wholesale structural changes for the post office, “including staff reductions, office closings, delivery changes and responsible benefit funding.” He said an overhaul bill would probably emerge from the committee within weeks.

Representative Elijah E. Cummings, the House oversight committee’s ranking Democrat, and Stephen F. Lynch, the federal work force subcommittee’s ranking Democrat, said in a statement that while suspending the payments might help in the short term, “the Postal Service will be unlikely to regain financial stability absent legislative action.”

Mr. Vegliante said that before Wednesday’s announcement the post office consulted the Office of Personnel Management and was told that neither it nor the Postal Service had the authority to stop the payments without legal or legislative action.

The agencies have asked the Justice Department’s legal counsel office to review the issue, and the post office agreed to resume the payments if the suspension was ruled invalid, the personnel office said.

Article source:

Speak Your Mind