OIG: More Early Retirements Would Create Additional Cost Savings For USPS


From the Office Of Inspector General:

The single largest Postal Service expense after compensation is purchased transportation. In 2010, the Postal Service spent $5.9 billion moving mail between cities with contracted highway, air, rail, and water transportation.

Overall, offering more early retirements for eligible employees would create additional cost savings. For retiree health benefits, there would be little total savings. Generally,the Postal Service would have to pay more for FEHB premiums in retirement but it would save on premium costs for the employee. As the Postal Service pays a greater share of premium payments for employees than the rest of the federal government (discussed earlier in this paper), it would save as Postal Service retirees pay premiums according to federal rates. The problem, however, is how to incentivize further buyouts
that the Postal Service cannot afford to offer in its current financial state.

Labor expenses are also affected by the way the Postal Service utilizes labor. Table 1 shows the number of Postal Service employees by category in 2010 and 2000. Since 2000, the Postal Service has shed over 200,000 career employees (26 percent), and has experienced an 18 percent drop in volume while increasing the number of delivery points by 10 percent. The top four employee categories by size are still city carriers,clerks, rural carriers, and mail handlers, although they have switched order since 2000 as some new automation and efforts to optimize the network have further reduced the complement of clerks.

As mail volume declines, the Postal Service has made a great effort to reduce its employee complement. This has been aided by the high number of retirement eligible employees in the postal workforce. The number of career employees has declined by more than 100,000 from 2006. In 2009, the Postal Service offered retirement incentives According to the Postal Service, that early retirement offer saved the organization nearly $350 million.26 Postal commentators have advocated for even more aggressive efforts to reduce the number of employees.

These retirements raise the question of what effect early retirement has on the Postal Service’s retirement obligations. Table 2 offers some insight into this issue. It describes the effect on both current employee costs and future retirement obligations, which it is assumed the Postal Service will have to fund fully at some point. The assumption is that employees who retire early are not replaced by new employees. The effect of pension increases versus salary increases is also not considered. Employees who retire earlier typically receive a smaller annuity. However, retirees receive automatic pension increases based on inflation in retirement. If these inflation increases are greater than 100,000 from 2006.In 2009, the Postal Service offered retirement incentives to certain employees, and more than 20,000 clerks and mail handlers took advantage.25 According to the Postal Service, that early retirement offer saved the organization nearly $350 million.26 Postal commentators have advocated for even more aggressive efforts to reduce the number of employees.These retirements raise the question of what effect early retirement has on the Postal Service’s retirement obligations. Table 2 offers some insight into this issue

full report: The Cost Structure of the Postal Service: Facts, Trends, and Policy Implications (Report Number RARC-WP-11-007)

23 thoughts on “OIG: More Early Retirements Would Create Additional Cost Savings For USPS

  1. Alfred E. Newman says that OPM can’t give years because of a rule. Aren’t
    rules made to be broken/changed? And since when does the PO follow a rule? If the PO wants to get rid of career employees (and they have no money) then years seems to be the answer.

    Approximately 1/3 of the FTR’s at our facility are just “hanging around” and
    waiting for a decent offer.

  2. This report spells it out – GET OUT as fast as you can. If Congress rescinds that baloon payment in October, then the USPS will have money for incentives. Also, this report fails to say anything about getting rid of management.

  3. I think, with regret, I have accepted the WTID retirement. WORK TIL I DIE. So much for the other half of the American Dream, ah, to have days without choosing to sleep in, not having to stand on concrete floors for 7 hours and 40 minutes a day 5 days a week, never to wear a uniform again,never having to work for a lying, deceiving,mismanaged, unorganized chaotic company that could’nt show a profit from a lemonade stand in South Texas. It’s getting real hard to feel good about the future of our company or our country. Someone please offer something positive.

  4. In regard to the OIG report of not having money for early retirement incentives I read this last year on another postal blog and wonder if this has been discussed?
    ” It makes you wonder whether the people at L’Enfant Plaza who provide estimates of retirement benefits are the same ones who allowed the government to overcharge the Postal Service $75 billion in pension costs.

    USPS officials are rightly arguing that the federal government should return those pension overpayments to the USPS. Their case would be stronger if they committed to putting some of that money aside for early-retirement incentives that would help reduce the Postal Service’s workforce, which constitute 80% of its costs”.

  5. Everyday I talk to people like me who have the time(36 years) but not the age(53) to retire but are willing to go,if the USPS comes out with anything to let us leave they will save money!Its a no brainer,even if you get only 5000 across the country thats 5000 less,with an incentive which can be funded by the salary you save you would get at least 20000!What are you waiting for?And give the Vets first crack at any jobs that are converted to PSE

  6. CSRS with 36 years in .PAY ME and I will go !! Otherwise i will continue to walk one stop at a time.

  7. The USPS can only offer $$$. Offering years of service is not allowed under OPM rules. No one is holding you here, just leave if your so unhappy. I love it here! This is better than watching TV. I used to be normal before I started working here. Now I’m warped in the head.

  8. Look at the Bailout for the Banks. All that needed to be done was to give everyone a 2 3 or 4 percent loan. Instead….well you know the story. Same with the P.O. Makes too much sense. People in control are only feathering their own nest and protecting their own interest. The Middle Class and Hard Working Silent Majority in this country are getting the Fid Again!

  9. OIG finally got something right. Early out, closing offices that exist only due to a time in history when transportation and communication were in a primitive state before developing in todays space age comunication and transportation mode. TIME past and makes history such as present USPS operation and even the spaceShuttle program as it is being disbanded on its return Friday.
    USPS should offer an early out to reduce craft and management union numbers from headquarters to level 11 offices.
    Congress must make it happen or continue to avoid and let TAXPAYOR pay the wasted cost of the debt laden USPS which fails to produce revenue as decline for products and service is in a rapid decline. Eliminate the 5.3 billion USPS pays for retirees health benefits and by end 0f quarter 3 will be 3-4 billion defecit.
    The INTERNET connects people and business in an instant; no purchasing a postage stamp depositing in postal system and awaiting a 1-2 deliveryto a physical mailbox at a street address. USPS had its place in time in keeping people connected world wide but is now a fossil phased out by space age technology.
    Give me the opportunity to leave via an early out and I am an OPM file number.

  10. Hey, do you want one up or two down?
    My brother Moe is tired of waiting for a buy out!
    woo wooo wooo, smack, poke, %$&$*#cha cha chaa

  11. With 35 years in soon, and 56 now, I would take any incentive and run.
    They can do it, be creative and make payments to me.
    If I max out my pension @ 41.11 months, I’ll get 83+ percent of my pay and that includes a projected 3300 sick leave account for an extra 3%. Do the math Mr. P.O., get rid of me now with a little incentive and I’ll take my 69+ % and run now. I don’t want to work 6 more years, but I have a hard head and will stay.
    3021 VS 4025 per month for life, WOW Mr. P.O., look at all the money you will save if you kick my ass out now with a little $$. Quit paying those Unions all that free money, they will drain you high and dry. Mr. P.O. needs a new arbitrator to decide these cases. Bitch!

  12. The cost difference between retired person and newly hired person is enormous. The post service should use as an incentive for FERS is level Three retirement pay. No cash is needed. We over payed OPM. The new hired person should be nothing but US Veterans only. Hire the Vet now.

  13. All I can say is when I retire, i won’t be wasting my time reading postal blogs like
    Phat Jack…..I agree…..Get a life!!!!

  14. I know that if they would give me five “fully funded” years toward retirement tomorrow…I would be gone this Friday. I am an ET with 27 years.

  15. That Phat Jack is such a charming fellow, however, where does all this anger come from? Hey Jack, Have another Beer!

  16. Why is someone who has retired from the Post Office actually reading and commenting on this website, “Phat Jack Potter”?? What a loser; you retire and you spend your time reading blogs about future retirement and making comments that do not contain a hint of material that shows any intelligence, only a lack thereof. Sad.

  17. I “retired” early and it cost the USPS $5 million.
    Too bad you suckas will get NO INCENTIVE.

    How about that fooking Cliff gave his membership ? Way to go Cliff !

    More Beef Wellington please !

    See ya, SUCKAS !

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