Myth: The Post Office must fund pensions for people who haven’t even been born yet. And more! Published by Jane the Actuary View all posts by Jane the Actuary
24 thoughts on “Forbes post, “Post Office Pensions: Some Key Myths And Facts””
I was a CSRS employee. I was required to pay for Medicare. I was not able to opt out. Reading a previous article it suggested that I was able to opt out. Which is it ?
Both — or, rather, with respect to Post Office employees (I haven’t looked into CSRS generally), you will receive Part A Medicare, but may choose not to take Part B, and that choice costs the Post Office more. https://link.usps.com/2019/08/22/medicare-integration/.
As all Medicare recipient are able to choose to not take B.
Bill, are you a current retiree? Are you on Medicare? I am trying to understand what the benefits and premiums look like for retired over-65 federal employees.
It’s funny you ask Bill those questions when a key sentence from your article is:
“No one is talking about the fact that retiree medical for the USPS is so high because its workers don’t (necessarily) participate in Medicare fully; instead, they may choose not to sign up for Medicare Part B, leaving the USPS to pay these costs instead”.
It’s a central part of your argument, so…(shrug emoji)
Your article is flawed and full of half facts.
How about you write an article on your bagmen big mailers and ask them to do what the president said to pay a fair price for there mailing.
Just read your article in Forbes and have some comments:
1. In 2006 PAEA compelled the USPS to pay in advance for the health and retirement benefits of all of its employees for the next 50 years, (https://en.wikipedia.org/wiki/Postal_Accountability_and_Enhancement_Act). So, where does your comment about it expiring in 10 years fit?
2. Most companies no longer have a defined benefit plan, those have been replaced with 401(k). I didn’t see any stats on that or clarification of the Defined Benefit Plans vs 401(k) Plans…most people don’t understand the difference. I do because I am an Accountant with TPA experience.
3. If companies are required to prepay their pensions (which is a Defined Benefit Plan discussed in #2 above (actuarial calculations for future benefits) then why are Trillions of dollars owed to underfunded pension plans (https://www.investors.com/etfs-and-funds/sectors/sp500-ge-not-alone-25-companies-owe-trillion-pension-payments/) AND (Trillions of dollars are owed to pension plans by states (https://fee.org/articles/the-5-states-with-the-most-underfunded-public-employee-pensions/).
5. Might I suggest either stay in your actuarial lane or do further research before writing an article like this?
Your Medicare information is fake. I paid Medicare starting in 1984 all the way until my retirement in 2008. I did not “opt out” nor was I given an opportunity to opt out. If the rest of your “facts” are as truthful as this one, you should apply for a job in the Trump Administration, where all facts are fake.
Enjoyed your article and it was very factual. One fact that you omitted is that the comparison to private sector business is a ruse put out by so many “right wing” think tanks and picked up by many in the media today. The Postal Service is a Government Agency and its Employees participate in the same Health, Pension, and Life Insurance Programs as all employees of the Federal Government, whether elected or hired. Fact: The Postal Service is the only Government Agency that is required to “pre-fund” period. Why? Because Congress in past budget games created this as a “stamp tax” knowing that this requirement placed on the Postal Service would cause an increase in prices, bring in more money to federal coffers, and Congress would not be blamed. All other Agencies pensions, health insurance and life insurance are merely funded as they go. This translates to Congress just authorizing printing more money each year to put into the funds as they go.
If “pre-funding” is needed and a good thing one must ask why this requirement is not placed upon all Government Agencies. After all if the Postal Service being billions of dollars in arrears due to a Congressional Created debt load is a earth shattering fact, then the US Federal Government being Trillions of Dollars in debt should be addressed with the same level of concern. But maybe that’s why the all other Government Agencies are not required to “pre-fund”. There is no money to do it with. But that would be the same problem the Postal Service has.
The post office is over staffed and over funded as a primary function of unnecessary services. Without being cruel, both sides need to figure out a dignified way of either expanding necessary services, if that is possible, or simply decrease new hires and begin phasing the post office into a smaller more centralized structure. At this point Amazon has taken over all of its own delivery on high concentration routes and only uses the USPS for non profitable delivery runs. Basically, as I see it, the post office is a poorly functioning vestige of a bygone era. Sorry
Big money wants to privatize USPS so they can pilfer the pension fund, Saint Ronnie and his band of grifters made pensions assets instead of liabilities. Once a business is sold (taken over), they absorb the pensions, and guess whose pockets get lined, but, nice try. As with all grifters you obfuscate and subjectively project what you want something to be.
If you choose not to receive Medicare Part B, post office insurance will NOT pay for the amount Medicare should have paid(if you had signed up for it). We found out the hard way when we had to pay a lot of money because we did not sign up for part B in time.
MYTH: The Post Office is required to fund pensions in advance in a manner applies to no other private-sector company.
FACT: They are required to pre-fund their retiree medical promises while no other private-sector company is.
This makes the myth a fact.
MYTH: The requirement to fund retiree medical benefits in such a short period of time was especially burdensome and unfair.
FACT: Yes, the 10-year contributions specified in the 2006 law were especially high because they aimed to “jump start” the fund — and because the amounts were meant to match anticipated savings from reduced pension contributions.
In spite of jumping to the present, the short answer was yes, it was especially burdensome and unfair. Financial problems do not simply vanish because the ten years term ended.
What surprises me Jane is you don’t discuss how regulation of postal rates by an independent federal agency might impact USPS revenue.
Typical Big Money / right wing plan turn everything into a self-fulfilling prophecy, point your finger and say …AHA!
Why don’t you mention that the USPS can only invest its pension in Federal Treasury bonds and not in the Stock Market like other companies can?
How do you respond to the USPS’s own statement:
that contradicts much of what you say is “fact”?
As an actuary, presenting something as myth versus fact seems rather political, and a statement of opinion, that happens to be false. I expect more from Forbes, and they should too.
I am just a person who is trying to educate himself. Your article does not help. Your facts don’t seem to all align with other articles I’ve read.
Leaving out facts is just as bad as presenting incorrect facts. You did not do a good job, as a journalist, to give a clear and complete picture. It seems that this article exists to disagree with most of the current USPS talking points.
You can, and should, be better. I also notice that you cowardly neglect to respond to any comments that don’t agree with you.
What an author!
I can’t understand how $3.5 billion is “only moderately more than $900 million”. To me, it’s WAY MORE!
You’ve misread this — $900 million isn’t the amount the $4.564 billion is being compared to, it’s the net difference between the $3.7 and the $4.5. Compared to an overall loss of $8.8 billion, this is a small fraction of the total.
Every myth you said was wrong. You should be ashamed of yourself of these false hoods.
Loved the article. I can see from the comments you touched a nerve,using Facts that people go to Wikipedia, lol to try and dispute your argument or left wing talking points or FB posts.
I am a CSRS retiree. Before I became Medicare eligible, my monthly bill for BC/BS was about $500. They essentially paid all my medical bills.
Then I got Medicare. Now, Medicare picks up the first 80% of the bills, and BC/BS picks up the remaining 20%. I’m still paying $500 a month to BC/BS, even though their costs for my health insurance have shrunk somewhere between 60 and 80%. Well, actually more, because it increases every year, but that’s another story.
It seems to me, that at the very least, BC/BS should have done one of 2 things:
Cut my premium by an amount commensurate with the savings they got when I joined Medicare.
At the very least, paid for my Medicare fees (currently about $160 a month) from my premium.
They have a reduced liability of 60-80%, yet my premiums didn’t go down 5 cents.
How is that fair?