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News Release

FOR IMMEDIATE RELEASE
Monday, February 28, 2011
Contact: Communications
Tel: 202-606-2402

News from the Office of the Inspector General (OIG)

OPM OIG Issues Study on USPS OIG's Proposals Regarding the Funding of USPS Retiree Benefits

Washington, DC - Today, the U.S. Office of Personnel Management (OPM), Office of the Inspector General (OPM OIG), issued a study analyzing certain proposals issued by the United States Postal Service (USPS), Office of Inspector General (USPS OIG), regarding changes in the manner by which the USPS funds both its retiree annuity and health benefit obligations. The OPM OIG paper, A Study of the Risks and Consequences of the USPS OIG's Proposals to Change USPS's Funding of Retiree Benefits: Shifting Costs from USPS Ratepayers to Taxpayers, reviews the impact that the proposals would have upon the trust funds and the Federal benefit programs administered by OPM.

In a series of reports containing these proposals, the USPS OIG has estimated that the USPS has "overpaid" these trust funds by as much as $142 billion. The proposals generally envision changing the law governing the manner in which the USPS's retiree benefit liabilities are determined and funded.

"We felt that the issues surrounding the USPS OIG's proposals had not been fully explored," said Inspector General Patrick E. McFarland. "It was important for us to examine not only the effects that the proposals would have upon the USPS, but also their impact upon the Federal retirement system as a whole. We were also concerned that there was a public perception that OPM may have inappropriately calculated the USPS's liabilities. In fact, our analysis revealed that OPM has fully complied with the law."

The OPM OIG study also concludes that generally the proposals would have a lasting negative effect upon the retirement programs and trust funds and have little, if any, positive impact upon the USPS's ultimate long-term profitability. In addition, the result of these proposals would be to shift costs from USPS ratepayers to the American taxpayers.

While the USPS's financial situation must be addressed, the OPM OIG study cautions against using the Federal retirement program as a vehicle through which to implement policy objectives unrelated to the Federal retiree benefit programs. "The resolution of the USPS's financial situation should be fully transparent rather than providing an indirect subsidy from the Federal benefits system," said Inspector General McFarland.

"While our findings do not support the USPS OIG's proposals," stated Inspector General McFarland, "we think that our work, combined with theirs, will help the Congress, the Administration, and the USPS to develop the most efficient and effective resolution of the USPS's current problems."

You may download the study by selecting this link:  www.opm.gov/oig/OPM_OIG_Study_of_USPS_OIG_Proposals%20Feb%2028%202011.pdf.

 

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