USPS to set up health funds
The Postal Service intends to use $10 billion in retirement fund overpayments to set up a health benefit account for its more than 800,000 employees, the Postal Service’s chief financial officer said.
Richard Strasser said the money would lay the foundation for a health benefit retirement program estimated to cost more than $40 billion.
Congress corrected a Postal Service accounting flaw earlier this year that would have directed more than $70 billion in overpayments payments to the retirement fund for postal workers. Instead the money is to be used to pay down debt in 2003 and 2004, and to use the extra money to stave off a rate increase in 2005.
But in 2006, the Postal Service has to put the overpayments to an escrow account it cannot touch without congressional approval. The health benefit plan is the Postal Service’s preferred option for the escrow funds.
However, the Postal Service said it would only be able to set up that plan if Congress relieves it of its obligation to pay more than $27 billion in military pensions for its employees. The Postal Service is the only agency required to pay military pensions for its own employees.
If the Postal Service still has to pay the military pensions, Strasser said the agency would use its extra cash to pay into retirement funds for employees hired after 2002.
The General Accounting Office has 60 days to comment on the Postal Service plans. Congress is expected to take action on the efforts within six months after the GAO issues its report.
