U.S. Postal Service workers and retirees are facing an uncertain future when it comes to their health care and pension benefits.
In May, the Postal Service’s Office of Inspector General released a report that took a look at the agency’s long-term labor expenses. As of the 2013 fiscal year, the Postal Service had approximately $47 billion in compensation and benefits liabilities, which includes $6 billion in liabilities for retirement benefits, according to the report.
The report noted the need for the agency to “create a new retirement plan for future employees” in order to tamp down on costs and work toward fiscal solvency. However, unlike the private sector, the agency cannot alter its workers’ benefits without congressional approval.
In Washington, there has been much talk, and no action, about what is the best approach to improve the Postal Service’s financial outlook. The agency has suffered because of a massive decline in mail volume, ballooning debt obligations and congressional requirements that they prefund their retiree health benefits.
“USPS’s financial condition has been designated as high risk because USPS’s business model is not viable as USPS cannot fund its current level of services, operations, and obligations from its revenues and urgently needs to restructure to reflect changes in mail volume, revenue, and use of the mail,” according to the U.S. Government Accountability Office (GAO). “Congress and USPS need to reach agreement on a comprehensive package of actions to achieve sustainable financial viability.”
One plan being bandied about Washington to shore up the agency’s finances is to require retirees to enroll in Medicare. Earlier this year, the Senate Homeland Security and Governmental Affairs Committee passed a bill that would force retirees to enroll in Medicare, among other restructurings of the agency’s business model and benefits system.
A House proposal to institute some structural and fiscal reforms recently stalled. The GAO warned that the agency could put its retirees’ health benefits at risk if it continues to fall short on required “pre-payments” toward health care costs.
The GAO also put together a 72-page report analyzing the surplus the agency could realize if it made changes to its health care plan, “primarily by increasing retirees’ use of Medicare.” There is no question about it: change is underway at the Postal Service. Urgent action is needed, according to the GAO.
At MyFedBenefits, we take all of these issues very seriously. We are concerned with how you may be affected. We encourage Postal Service workers and retirees to give us a call. Let us help you shape your financial future amid this very rocky time at the agency.
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