USPS would be, and historically has been, profitable if it weren't for the politicians actively trying to drag it down with arbitrary, arcane rules to protect their donors.
It is interesting, because shouldn't the expectation be that a pension be funded as the benefits accrue? That seems like the safe sustainable way to run things.
It absolutely should be. The question should not be why USPS was asked to fund accrued benefits properly. The question is why all the other city, county, state, and federal government accrued post employment benefits are not funded properly.
> I’m not sure how that benefits any of “their donors”
You can't see how kneecapping the USPS might help FedEx, UPS, and Amazon?
The point of making the USPS pre-fund their pension obligations was to be able to turn around and say "look at the horrible state of their finances, government is clearly so inefficient, we should privatize it".
USPS was simply required to fund accrued post employment benefit obligations, something that all non governmental entities have to do.
The reason governments can offer ridiculous post employment benefit obligations, such as above average defined benefit pensions and retiree healthcare, is that the laws governing funding for these benefits only applies to non governmental entities.
Not a surprise that politicians exempted governments from the same funding rules, opting instead to kick the can down onto future taxpayers and opt for offering voters lower taxes now. The real question is why only the USPS was asked to fund accrued benefits, and not every single other governmental entity in the US.
>Other federal agencies and most private sector companies use a “pay-as-you-go” system, by which the entity pays premiums as they are billed.
There are very strict rules about how non governmental employers have to calculate deferred compensation liabilities, and how much funding they have to have. The relevant laws are ERISA 1974 and PPA 2006. Once the deferred compensation is accrued, the employer must value the liabilities using certain yield curves for high grade corporate bonds and maintain certain funding levels. It is why private employers stopped offering pensions, it is exorbitantly expensive if you properly account for it, especially with increasing lifespans.
I do not know what USPS means when it says "pre-fund", but the text of the USPS funding law is here in section 802. To me, it indicates that money needs to be set aside for accrued benefits (from the wording "future payments required"). I also do not know if USPS is true in its claims that non government entities do not have to fund retiree healthcare benefits. I am pretty sure it would be covered by ERISA and PPA 2006, just like defined benefit pensions are, OR retiree healthcare benefits are not protected by law and if a company wants to stop paying them, they can.
>`(d)(1) Not later than June 30, 2007, and by
June 30 of each succeeding year, the Office shall compute the net
present value of the future payments required under section
8906(g)(2)(A) and attributable to the service of Postal Service
employees during the most recently ended fiscal year.
>(A) The Government contributions authorized by this section for health benefits for an individual who first becomes an annuitant by reason of retirement from employment with the United States Postal Service on or after July 1, 1971, or for a survivor of such an individual or of an individual who died on or after July 1, 1971, while employed by the United States Postal Service, shall through September 30, 2016, be paid by the United States Postal Service, and thereafter shall be paid first from the Postal Service Retiree Health Benefits Fund up to the amount contained in the Fund, with any remaining amount paid by the United States Postal Service.
> Rather, pursuant to OPM’s methodology, such
payments would be projected to fund the liability over a period in excess
of 50 years, from 2007 through 2056 and beyond (with rolling 15-year
amortization periods after 2041). However, the payments required by
PAEA were significantly “frontloaded,” with the fixed payment amounts in
the first 10 years exceeding what actuarially determined amounts would
have been using a 50-year amortization schedule.
> We also reviewed the prefunding requirements for other organizations
that offer retiree health benefits to their employees: private sector entities,
state and local governments, and other federal entities. Although other
federal, state and local, and private sector entities generally are not
required to prefund retiree health care benefits, a few do prefund at
limited percentages of their total liability.
> For example, Standard & Poor’s (S&P)
reported that 126 of the 296 companies in the S&P 500 that offered “other
post-employment benefits” (OPEB)64 prefunded some percentage of the
associated liabilities, while the USPS OIG has reported that 38 percent of
Fortune 1000 companies that offer retiree health care benefits prefund
them, at a median funding level of 37 percent.
> if it weren't for the politicians actively trying to drag it down with arbitrary, arcane rules to protect their donors.
Is there a sector/program in the gov't where that isn't the case? Every entity that is created is just a new fiefdom to expand and lord over from the time it's created to infinity.
If the USPS wasn’t a government agency, I would weld my mailbox shut and never look back.
USPS is profitable because we all accept the idea that companies are allowed to pay somebody to load literal trash through a hole in the side of my house.
I mean I also get important mail in there, as so I expect most people. Same way Google delivers multiple times more trash to my Gmail account but I don't say I need to stop using email
It is interesting, because shouldn't the expectation be that a pension be funded as the benefits accrue? That seems like the safe sustainable way to run things.