Tennessee Congressman to Super Committee: Stop Early Retirements

The following is a press release from  John J. Duncan, Jr.  (R-TN 2nd district):

Rep. John J. Duncan, Jr. in a letter this week urged the Congressional “Super Committee” tasked with finding trillions of dollars in savings in the federal budget to put a stop to early federal retirements.  Read more

USPS Wants to Offer Eligible Postal Workers Early Retirement?

As Don Cheney pointed out:

With all the other commotion going on, most eligible postal employees have overlooked this. I’m amazed anyone would retire right now without waiting to see what comes out of Congress by November 18th, the new deadline for USPS to make its $5.5 billion payment.  Read more

NAPUS President Discusses Early Outs and Incentives in Meeting With PMG

From the National Association of Postmasters of the US (NAPUS):

In yesterday’s monthly meeting with Postmaster General Patrick Donahoe, NAPUS President Bob Rapoza discussed Voluntary Early Retirements (VERs), Incentives and adding years of service as possibilities to help ease the financial burdens of the USPS. While many options are being considered as the Postal Service attempts to reduce the number of on roll employees, President Rapoza suggested that VERs, Incentives and adding years of service should be strongly considered as part of the process. Read more

Editorial: Update – Does the Postal Service Really Want Early Retirements?

A year ago I speculated in the PostalReporter News Blog, “In recent VERAs the Postal Service issued FERS annuity estimates that omitted the employee’s FERS annuity supplement.  The FERS annuity supplement is often nearly equal to the basic annuity amount.  Was that to discourage early retirements so they can justify weakening the no-layoff clause in upcoming contract negotiations?”  My suspicions have proven correct.  Recently the Postal Service asked Congress to authorize layoffs of career employees without offering VERs first.

The response rate to USPS early retirement offers has been poor.  Lots of postal employees eligible or potentially eligible for the FERS annuity supplement have complained they didn’t know how much it was.  When they called the HR Shared Services Center, they couldn’t get this information.  Will the Postal Service continue to fail to provide this information?

I applaud Ernie Kirkland of the National Association of Letter Carriers for raising this issue in Federal Times.  The other postal organizations have been strangely silent. OPM’s “CSRS and FERS Handbook,” Chapter 40, Section 40A2.1-3.N, requires the Postal Service to furnish an estimate of the FERS annuity supplement to eligible employees upon request.  Most other federal agencies do.

 FedBens.us will calculate the exact amount of your FERS annuity supplement using the same method as OPM.  You will need your annual FERS earnings history.  Estimates that use your Social Security record are less accurate, because your Social Security record includes work not covered by FERS and FERS service prior to age 22, neither of which is counted in calculating the supplement.  You can learn more at FedSmith.com. 

 I should add that there is a common misconception (not dispelled by USPS) that you have to reach age 59 ½ to withdraw your Thrift Savings Plan funds without an IRS early withdrawal penalty.  There is an exception.  When you retire or separate, the minimum age to withdraw your TSP funds without an IRS early withdrawal penalty is 55.  If you retire or separate before age 55, you can still avoid the IRS penalty by choosing an annuity or leaving your money in the account.  See TSP publication 536, “Tax Information: Payments From Your TSP Account.”

Postal employees in FERS normally need 30 years of federal service to get the FERS annuity supplement before age 60.  Many don’t know, and aren’t told, that in a VERA, RIF, or involuntary transfer over 50 miles the minimum service requirement is reduced to 20 years.  FERS employees who retire (other than on disability or MRA+10) at less than age 62 will always receive an annuity supplement.  The FERS annuity supplement begins when you reach your MRA (about age 56).  It ends at age 62 when you become eligible for Social Security.
 
Don Cheney
Auburn WA

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

But….

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)

Voluntary Early Retirement Opportunity For Clerks and Carriers in Selected Offices

Bay Valley District – No Retirement Incentive – Shared Services will be mailing VERA offer letters and annuity estimates from July 19-22, 2011 to VER eligible employees. The VER retirement application deadline and irrevocable date is August 26, 2011.

Alameda, Alamo, Antioch, Aptos, Benciia, Brentwood, Byron, Carmel, Clayton, Campbell, Capitola, Concord, Crockett, Cupertino, Danville, El Cerrito, Fairfield, Felton, Fremont, Gilroy, Hayward, Hollister, Lafayette, Livermore, Los Gatos, Marina, Martinez, Milpitas, Monterey, Moraga, Morgan Hill, Napa, Newark, Oakland, Oakland P & DC, Oakley, Orinda, Pacific Grove, Pebble Beach, Pinole, Pittsburg, Pleasanton, Richmond, Rio Vista, Rodeo, Saint Helena, SF NDC, Salinas, Salinas PDF, San Bautista, SAn Jose, San Jose, P & DC, San Leandro, San Lorenzo, San Ramon, Santa Clara, Santa Cruz, Saratoga, Seaside, Soquel, Suisun City, Union City, Vallejo, Walnut Creek, Watsonville, & District Customer Services Support

You may retire if you meet the age and swervice requirements shown below

• Age 50 with 20 years of Service

• Any age with 25 years of Service

Civil Service Retirement System ( CSRS): Your annuity benefit will be reduced by 2% for each year (1/6% per month) that you are under agfe 55 on datre of retirement and the reduction is permanent.

Federal Employee Retirement System (FERS): If you meet the above requirements your annuity benefit will not be reduced with age. Special Retirement Supplements are payable until age 62 when you reach the minimum retirement age(55-57). Social Secuity benefits begin when you reachg age 62.

Shared Services will be mailing VERA offer letters and annuity estimates from July 19-22, 2011 to VER-eligble employees. The VER retirement application deadline and irrevocable date is August 26, 2011. One Important thing to note is that you must follow the process in your letter to opt in and take advantage of this early out. If you participate in the VER, your retirement effective date will be August 31, or Septmener 30, 2011.

The VER is a part of Pacific Area efforts to streamline operations, increase effienciencies and reduce costs in support of the Postal Services’s action plan to ensure a strong, viable orgnaization now and in the future.

Dates for retirement seminars will be announced soon.

 

Burrus: It’s Time For USPS To Consider Offering Healthy Retirement Incentive

Perhaps it is time for the Postal Service to consider offering a healthy incentive for APWU represented employees to retire. The wage difference between a Grade 6 Step 0 employee and a newly hired replacement is $18,000 per year ($53,102 vs. $35,182) so for every 1000 employees replaced, the Postal Service saves 18 million dollars per year. It would be in their financial interest to entice those employees eligible for retirement to retire.

The Postal Service is strapped for cash so it will not be easy to fund the cost of an incentive, but there are creative ways to defer the cost while generating savings. In the previous effort, agreement was reached to spread the incentive over two years to lessen its immediate impact on the USPS’ financial position and other innovative approaches could be explored.

The problem is that employees, who are eligible, refrain from severing their employment for a variety of personal reasons and continue to work for lack of an alternative that meets their objectives. An incentive would influence many who will otherwise continue their employment for an indeterminable period.

The consideration of offering an incentive does not include what is known as “early outs” permitting employees to retire earlier than the legal formula. The Postal Service must receive the approval of OPM to offer early outs and such permission will not be granted, if it is intended to replace the retiring employee. Early outs cannot be used to reduce payroll costs.

At a time when the Postal Service is experiencing severe financial problems brought on by the unreasonable payment for future health care costs consideration should be given to this opportunity for significant savings.

In solidarity,
Bill Burrus

Burrus Journal

USPS Offering Retirement Incentives To Some Supervisors in NY, Honolulu, NJ, Carribbean Districts