PRC looking for Actuarial Consultant Services to review current CSRS obligations
Statement of Work for Actuarial Consultant Services – Federal Business Opportunities: Opportunities:
On January 20, 2010, the U.S. Postal Service Office of Inspector General (OIG) published a document entitled “The Postal Service’s Share of CSRS Pension Responsibility.” This paper is identified as Report No. RARC-WP-10-001 and is posted under White Papers on the USPS OIG’s website.
The paper examines the Postal Service’s responsibility for CSRS-related pension obligations at the time of the Postal Service’s July 1, 1971 transition from a Department-level agency (Post Office Department) to an independent establishment of the federal government. It notes that the Office of Personnel Management (OPM) developed the current method of allocating these obligations between the Postal Service and the Federal Government and explains the methodology, including key assumptions. The report also describes an approach that the OIG believes would be more appropriate and equitable.
On February 23, 2010, as modified March 2, 2010, the Postal Service requested that the Commission initiate a review of decisions made by OPM regarding the Postal Service’s CSRS liabilities and issues highlighted in the USPS OIG report, including the report’s conclusion that OPM’s method, among other things, has resulted in substantial overfunding. The request was filed pursuant to section 802(c) of the Postal Accountability and Enhancement Act (PAEA) of 2006, Pub. L. 109-435, 120 Stat. 3250-51. The Postal Service requests the Commission’s opinion on the fairness and equity of the current OPM method used to apportion the CSRS obligation between the Postal Service and the POD.
The PRC requires actuarial consultant services, using the OIG report as background, to review the method selected by OPM to allocate CSRS obligations associated with USPS employees’ POD-era service between the Postal Service and the federal government.
The actuarial consultant shall provide reports, documentation and deliverables in verbal, written or electronic format (as appropriate) and shall provide weekly written progress reports.
The actuarial consultant shall:
Review the method employed by OPM to allocate CSRS liabilities incurred during employment by the POD and during employment with the USPS between the Postal Service and the Federal Government for the purpose of assessing the advantages and disadvantages of this allocation method
Advise as to any alternative methods that should be considered, including (but not limited to) the method suggested in the OIG paper
Provide an assessment of how an allocation would be structured if all parties had negotiating power similar to that involved in acquisitions in the private sector
As applicable, provide recommendations typically made in similar situations for estimating the allocation of pension liability between a parent company and subsidiaries, particularly if those subsidiaries are divested
As applicable, compare OPM’s current method of allocation to standard or typical allocation methods used in a spin-off by other semi-government, government bodies or private sector entity undergoing a similar restructuring
Meet with OPM, USPS and USPS OIG actuaries, as needed, to discuss and to apply methods and results.
Support PRC staff members in identifying and assessing appropriate allocation methods
Provide related supporting data and, to the extent practicable, models or description thereof, to PRC staff
Address the appropriate level of funding for a Retiree Pension fund, including standard or typical practice, risks of overfunding vs. underfunding, volatility of funding assumptions, and any other important issues
The actuarial consultant must be a member in good standing of the American Academy of Actuaries, have extensive experience in the pension field, and must have experience analyzing pension issues in a legal and legislative context.
The actuarial consultant must disclose all current and previous work performed for USPS or any other federal agency. The actuarial consultant also must disclose any pending negotiations for professional engagements with USPS or other federal agencies, apart from this SOW.
The actuarial consultant shall provide a description of qualifications, proposed work methods, an estimate of the length of time needed to complete the project, the total cost of the project, and the basis for the calculation.
The actuarial consultant shall acknowledge that if selected to provide professional services pursuant to this SOW, all work will be conducted with the understanding that time is of the essence in meeting the contractual deadline and that no extension of the deadline will be allowed.
Deliverables Date due: July 1, 2010
Provide a written evaluation of the determinative factors in assessing an appropriate allocation method and an evaluation of the current method used in OPM’s allocation. The evaluation will include:
1. A comparison, where appropriate, to allocation methods typically used for splitting pension liabilities;
2. An assessment of the alternative method set out in the OIG paper;
3. Specific discussion of the effects of the current allocation method on affected parties
Commission and Staff Review Session