From USPS News Link

The Facts

The Postal Accountability and Enhancement Act abolishes the escrow requirement of a 2003 law designed to correct Postal Service overpayments to the Civil Service Retirement System fund.

That 2003 law let USPS use the amount of the overpayment for operating expenses for three years. But it required that the Postal Service begin in 2006 to put the money into an escrow account, with the use of those funds to be decided by Congress at some later date.

Under the new postal law, the escrow account has been abolished and payment will be made into a new retiree health benefits fund, which will pre-fund health benefits for postal retirees. The payments will be approximately $5.5 billion a year.

The new postal law also returns to the Department of the Treasury the obligation to pay for the military retirement costs of postal employees who are veterans. The 2003 postal law had transferred that $27 billion obligation to the Postal Service.

The PMG’s view

To fully appreciate the changes this law brings us, consider how far we’ve come over the past six years. In 2001, the Government Accountability Office (GAO) placed us on its “high-risk list” due to our unfunded liability obligations.

 Now, thanks to the new postal law, that gaping liability is gone. We no longer have to pay for the military retirement costs of postal employees. We have a fully funded pension system for both the Civil Service Retirement System and the Federal Employees Retirement System.

 And in just 10 years — by 2016 — our health benefits will be nearly fully funded, with about $100 billion in the new health benefits fund.

When faced with these “legacy costs,” most organizations either reduce or eliminate benefits. However, our employees can count on having their pensions and health benefits.

I’m proud of the fact that working with Congress, the Administration and the mailing community, we’ve been able to protect employee benefits and put the Postal Service on a firm financial footing for the future.

This is the second in a series of weekly news stories featuring the Postmaster General giving his views on the new postal law and what it means to the future of the Postal Service and its employees. Employees with comments or questions about this article are welcome to e-mail them to:  postallawQandA@usps.gov. Selected responses with answers will appear in Friday’s issue of USPS News Link.