APWU President: ‘We Will Take Every Step Necessary To Ensure Retirement Benefits Are Protected’
The American Postal Workers Union is working fervently to make certain that the Postal Service’s decision to suspend employer contributions to FERS does not negatively affect the nation’s postal employees, President Cliff Guffey said on June 22. “We will take every step necessary to ensure that retirement benefits are protected. We are currently evaluating the best course of action.”
There is a solution to the Postal Service’s financial crisis, he noted:
- The USPS has overfunded its FERS and CSRS retirement accounts by billions of dollars;
- It is the only employer — public or private — that is required to pre-fund the healthcare benefits of future retirees. This obligation drains more than $5 billion annually from the USPS budget, and is the principal cause of the Postal Service’s dire financial circumstances.
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“Congress must act now to correct these inequities,” Guffey said. “It can start by passing H.R. 1351, which would allow the Postal Service to apply pension overpayments to the pre-funding obligation. This bill would provide the USPS relief from its financial crisis at no cost to taxpayers.
The Postal Service’s financial predicament is the result of flawed legislation (the Postal Accountability and Enhancement Act of 2006) that Congress can and must correct, the union president added.
“Postal workers did not cause USPS financial problems and their retirement benefits should not be jeopardized to solve them.”
source: APWU
USPS Notifies OPM of Its Intention to Suspend Employer’s Contributions To FERS
Filed under: FERS, opm, postal, postal news, press releases, usps
U.S. Postal Service Institutes Cash Conservation Plan- FERS account surplus valued at $6.9 billion
WASHINGTON — The U.S. Postal Service has informed the Office of Personnel Management (OPM) of its intention to suspend its employer’s contributions for the defined benefit portion of the Federal Employees Retirement System (FERS) to conserve cash and preserve liquidity. The Postal Service has a FERS account surplus valued at $6.9 billion. Read more
OPM Memo: Recredit of Sick Leave for Re-employed FERS Retirees
The following is a Memo released by the Office Of Personnel Management (OPM)
Recredit of Sick Leave for Re-employed FERS Annuitants Who Retire Between October 28, 2009, and December 31, 2013
The U.S. Office of Personnel Management has been asked whether employees covered by the Federal Employees Retirement System (FERS) who retire between October 28, 2009, and December 31, 2013, with 50 percent of their sick leave having been credited toward their FERS annuity computation, could have the remaining 50 percent of their sick leave recredited to their sick leave account if they return to Federal service as reemployed annuitants. The answer is yes. Agencies should recredit reemployed annuitants the 50 percent of sick leave that was not used in their FERS annuity computation. For employees who retire or die in service on or after January 1, 2014, all unused sick leave to the employees’ credit will be creditable for annuity computation purposes. Further, for FERS employees who retire on or after January 1, 2014, 100 percent of their sick leave will be used in the annuity computation, consequently, no sick leave will remain for recredit should the retirees later return to Federal service.
Agencies must take action to identify FERS employees who initially retired on or after October 28, 2009, and who have since returned to Federal service as reemployed annuitants, to ensure that the employees have received recredit of the 50 percent of sick leave that was not used in the computation of their annuities.
Background
Section 1901 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84, October 28, 2009) amended 5 U.S.C. 8415 to provide that employees covered by FERS who retire on an immediate annuity, or die while in active employment leaving a survivor or survivors, between October 28, 2009 (the date of enactment of the statute), and December 31, 2013, will receive credit for 50 percent of their unused sick leave towards their total creditable service for annuity computation purposes.
Additional Information
For additional information, please refer to Benefits Administration Letter Number 11- 102, Guidance on National Defense Authorization Act for Fiscal Year 2010 Provisions on Sick Leave for FERS Retirees.
Agency Human Resources (HR) Directors may also contact their assigned OPM Human Capital Officers. Reemployed annuitants should contact their agency human resources or benefits offices for assistance.
From: Charles D. Grimes III
Acting Associate Director
Republicans Introduce Bill To Eliminate FERS Retirement For New Hires
Republican Senators Richard Burr, (R-NC) and Tom Coburn (R-Oklahoma), on Thursday introduced a bill (S. 644) that would eliminate the pension portion of the Federal Employees Retirement System (FERS) for all new federal employees hired after 2012. The legislation would not affect Thrift Savings Plan benefits and agency-matching contributions. It also will not affect FERS pensions for current federal employees and retirees. It would, however, apply to members of Congress.
Press Release
Today, U.S. Senator Richard Burr (R-North Carolina), along with Senator Tom Coburn (R-Oklahoma), introduced the Public-Private Employee Retirement Act of 2011 to address long-term liabilities facing the federal government. The legislation would end the defined benefit pension portion of the Federal Employee Retirement System (FERS) for new federal government hires starting in 2013, leaving fully in place the Thrift Savings Plan with the current match (up to 5%) for both current and future federal workers. The bill would also apply to Members of Congress.
“Right now, federal government workers receive far more generous retirement benefits than private sector employees. The cost to taxpayers of these benefits is unsustainable and we simply cannot afford it,” said Burr. “We cannot ask taxpayers to continue to foot the bill for public employee benefits that are far more generous than their own.”
“The congressional pension plan currently in place only serves to foster political careerism and should have been frozen years ago. In addition to enjoying a better benefits package, federal workers generally earn up to 20 percent more than their private sector counterparts. When American families across the country are being asked to sacrifice in order to meet their basic needs, federal employees and members of Congress should not be the exception. Defined benefit pension plans are going belly-up across the nation because politicians and employers continue to make promises they cannot keep. Existing federal employees will be unaffected, and all federal employees would continue to enjoy a 401(k)-style pension plan with a very generous federal match. But the only responsible thing to do is stop making irresponsible commitments and forcing future generations to pick up the tab,” said Dr. Coburn.
Currently, federal workers enjoy both a defined benefit pension and a Thrift Savings Plan (equivalent to a 401(k)) with up to a 5% match, paid for by the taxpayers. The average private sector employee gets a 401(k) with a 3% employer match and no pension. Federal workers also continue to enjoy federal health care benefits (FEHBP) after they retire, a benefit that is becoming increasingly rare in the private sector.
Current federal government employees and retirees would not be impacted by the changes in the Burr-Coburn bill.
White House Budget Outlines Repayment To USPS For FERS Overcharges..But
The White House released the 2012 budget today. In the budget it proposes to reimburse USPS for $6.9 billion in overcharges for FERS retirees. But the repayment is spread over 30 years, including $550 million in 2011.
Here is the summary from the White House 2012 Budget outlining provisions for USPS:
The Administration recognizes the enormous value of the Postal Service to the Nation’s commerce and communications, as well as the urgent need for reform to ensure the future viability of USPS. Therefore, the Budget proposes specific short-term financial relief measures, grounded in principles of fiscal responsibility as well as sound financial management, and the Administration will work with the Congress and postal stakeholders to secure necessary reforms. As to the structure of relief, the Budget would improve USPS financial condition by returning to USPS surplus amounts it has paid into its OPM account for its share of Federal Employee Retirement System costs. OPM has determined this surplus is approximately $6.9 billion, which would be paid back to USPS over 30 years, including an estimated $550 million in 2011. Secondly, the Budget proposes to restructure USPS retiree health benefits payments that were specified by the 2006 Postal Act. This change would still prudently pre-fund retiree liabilities, but on an accruing cost basis rather than the arbitrary amounts fixed in current law, which do not allow for the dramatic shifts in demand or workforce size that USPS has experienced in recent years. This restructuring and near-term deferral would provide USPS with $4 billion in temporary financial relief in 2011. Over the 2011 to 2021 budget period this proposal has an estimated deficit effect of $5 billion. See the Office of Personnel Management section of this Appendix for more information on this proposal.
These steps to provide USPS with the breathing room necessary to continue restructuring its operations without severe disruptions must be coupled with meaningful reforms to its business model to make USPS viable for the medium- and long-term. Postal volumes have dropped precipitously in the last few years due to the economic crisis and longer-run shifts in communication technologies and use shifts that have created new challenges even as they propel innovation and revolutionize our economy. The Postal Service needs the flexibility to adapt to these changes and higher public expectations for customer service. To that end, the Administration’s discussions with the Congress and others will be guided by the goals of allowing the Postal Service to: 1) Realign its infrastructure, facilities, processing and delivery systems to continuously improve efficiency; 2) Promote an adaptive, 21st Century workforce; and 3) Accelerate value creation and enhance service to the public while respecting fair competition in the marketplace.
And from the OPM:
POSTAL SERVICE RETIREE HEALTH BENEFITS FUND
As a result of this health benefits financing system, beginning in 2017, the Postal Service will cease to pay annual premium costs for its post-1971 current annuitants directly to the Employees and Retired Employees Health Benefits Fund. Instead, these premium payments will be paid from amounts that the Postal
Service remits to this fund. Payments for a proportion of the premium costs of Postal Service annuitants’ pre-1971 service would continue to be paid by the General Fund of the Treasury through the Government Payment for Annuitants, Employees Health Benefits account.
The Budget proposes to shift how the Postal Service (USPS) pre-funds its retiree health benefits unfunded liability (UFL). Under current law, from 2011 to 2016, USPS must make a stream of payments set in statute toward paying down retiree health benefit unfunded liabilities, as well as pay annual premiums for current retirees. Also under current law, starting in 2017, USPS must pay the per capita accruing costs (or normal cost) to fund future retiree health benefits of current employees and a 40-year amortization of the remaining UFL for current retirees.
Under the proposal, starting in 2011, USPS would pay the normal costs for the future retiree health benefits of current employees and also a stream of payments associated with paying down the remaining UFL for current retirees. Further, USPS would be provided temporary financial relief as the 2011 payment would be adjusted so that USPS would pay $4 billion less than what it would have paid to this Fund under current law. USPS would make up this $4 billion payment to the Fund by paying larger amounts in future years. Beginning in 2022, USPS would pay the remaining UFL, amortized over 40 year period.
This proposal provides the following benefits to USPS: 1) USPS would be provided temporary financial relief in the form of a lower payment in 2011; 2) The new calculations of normal cost and UFL are based on new actuarial assumptions that reflect that USPS has fewer employees than in 2006, when the prefunding mechanism was originally adopted—therefore the actual annual payments for the normal costs would be reset each year based on the number of USPS employees; 3) This Fund would pay the premiums for current USPS retirees now, rather than starting in 2017—this accelerates what would have occurred anyway in 2017 under current law. See the Postal Service section of this Appendix for further information on this proposal.
No ‘Payroll Tax Holiday’ for CSRS Employees
The tax cut President Obama was expected to sign Friday will not include a payroll tax deduction for all federal employees.
Employees under the Federal Employees Retirement System will see their contributions into Social Security drop from 6.2 percent to 4.2 percent in 2011 as part of a payroll tax holiday. But Civil Service Retirement System employees — who do not pay into Social Security — will not see a similar cut in their 7 percent contributions into their retirement system.
The National Treasury Employees Union objected, and said the exclusion of CSRS employees “fails an important test of fairness.”
“CSRS-covered federal employees … should have received a similar or equivalent benefit, particularly since they work side by side with those under FERS,” NTEU President Colleen Kelley said in a Dec. 17 statement. “This additional take-home pay is particularly important in light of the pay freeze for federal employees proposed by President Obama.”
Full story from Federal Times
Postal Employee Who Retired Under Early Retirement Is Challenging OPM Over FERS Annuity Supplement
Filed under: FERS, legal cases, opm, postal, postal news, retirement, usps, vera
My name is Lennis B. Reynolds I am a retired Postal employee who took a VER/Incentive offer in August 2009. I am taking OPM to MSPB about the FERS Annuity Supplement. The difference without the Supplement is $1000.00 per month in retirement income.
To : Honorable Howard J. Ansorge
Administrative Judge
Central Regional Office
230 South Dearborn Street, Room 3100
Chicago, IL 60604-1669
Dear Judge Ansorge:
I, Lennis B. Reynolds CH-0841-10-0788-I-1,CSA 8 436-635 desires an in-person hearing, I will conduct the hearing in this appeal by telephone .The telephone hearing will be held: Date: September 13, 2010 Time: 2:00 p.m. Central time (3:00 p.m. Eastern) I am requesting a in person hearing.
PREHEARING SUBMISSIONS
The issue is a employee who retires under their MRA under FERS is eligible for the FERS Annunity Supplement when retiring on VERA. OPM position is that you have to be MRA to collect the FERS Annuity Supplement, but according to the THE FEDERAL EMPLOYEES’ RETIREMENT SYSTEM ACT OF 1986 legislation clearly states it allows only four types of retirement benefits :Unreduced, reduced, ‘involuntary, and deferred vested annuities.
Under the THE FEDERAL EMPLOYEES’ RETIREMENT SYSTEM ACT OF 1986 a employee who retired inVoluntary would have to wait to MRA not Voluntary(See exhibit 1). When Voluntary Early Retirement Laws Enacted in the 107/108th Congress under Voluntary Early Retirement Authority. Under both CSRS and FERS, a federal employee is eligible for an IMMEDIATE UNREDUCED RETIREMENT annuity at age 55 with 30 or more years of service. Under voluntary early retirement authority (VERA), the age and service requirements are reduced to 20 years of federal service at age 50 or 25 years of service,regardless of age. (see exhibit 2).
The Homeland Security Act (P.L. 107-296) provides that with the approval of OPM, an agency undergoing restructuring or downsizing can offer voluntary early retirement to employees in specific occupational groups, organizational units, or geographic locations. Reductions in annuity amounts for early retirement will continue to apply . In your offer (the “agency”) must submitted a request to OPM for a grant of authority to offer voluntary early retirement in conjunction with a proposed major reduction in force (“RIF”). OPM/ agency must have this in your offer letter see (JOSEPH T. TORRES,Petitioner,v.OFFICE OF PERSONNEL MANAGEMENT.(see exhibit 3)THIS WAS NOT IN MY offer letter ONLY a VER offer was issued NOT a proposed major reduction in force (“RIF”)this was not INCLUDED IN MY OFFER LETTER.
I was offer to retire voluntary. .(see exhibit 4.) I also took a look at my form 50 and I looked up how agency/OPM retired me I was retired Involuntery (see form 50 Nature of Personnel action(Nature of action code is (303) Description (Retirement-Special-option .(see exhibit 5.) Chapter 30. Retirements (Natures of Action 300, 301,302, 303, and 304).then go to Table 30-B. Remarks Required for Retirement Actions rule(see exhibit 5 A1) .
According to voluntary Early Retirement Laws Enacted in the 107th/108 Congress under Voluntary Early Retirement Authority I retired(voluntary with unreduced benefits the same way that a regular employee /special groups retirement it is Voluntery. Note: only the age and service requirements are reduced not the benefits. OPM retired me under Early retirement provision under CSRS not Voluntary Early Retirement under FERS it is a big diffence see chapter 43 fers(see exhibit 6). OPM retired me as an Early-Optional retiree when I should have been retired on Voluntary Optional.(see exhibit 7) I was not in a MAj-RIF must be in my offer voluntary early retirement in conjunction with a proposed major reduction in force (“RIF”). this was noted in my offer letter.
If you have any question please feel free to call XXX-XXX-XXXX this is a major case on all FERS employees who retired under VER and who is under their MRA. Note: I had a prehearing telephone conference call with the Honorable Howard J. Ansorge and OPM Agency Representive James Wiliams. In the conference call OPM claims that they retired me under 8414b (1) B. OPM cannot retire any FERS employee who retired voluntary under 8414 b (1) B unless the agency is undergoing a RIF and they must be documented in the offer letter as a reasonable offer. Therefore under U.S Code 8421 Annuity Supplement paragraph a(2) only applies to people who retired involuntary not voluntary. The only way a FERS employee can retire,. who retired voluntary is under U.S. Code 8412 IMMEDIATE RETIREMENT. The decision will be on September 13, 2010
Sincerely
Lennis Reynolds
former non-commissioned officer/retired Postal employee:
**This article may not be reprinted or republished without the approval of PostalReporter.com or Lennis Reynolds.
OIG Says USPS Overfunded Its FERS Retirement Obligations By $6.8 Billion
A new audit report from the Office Of Inspector General says that the USPS over-funded its FERS retirement obligations by $6.8 billion. The OIG reported several months ago that USPS overfunded its CSRS retirement obligations by $75 billion.
Excerpts:
Consistent with other retiree benefit obligations, the Postal Service is being unfairly burdened for its share of the FERS pension obligation. The OPM projected a $6.8 billion surplus in the Postal Service’s FERS obligation at the end of FY 2009. The OPM acknowledged that the federal government’s FERS obligation, excluding the Postal Service, was unfunded by $7.4 billion at the end of FY 2008.The funding status for the Postal Service, as well as the federal government, is calculated by subtracting the pension assets from the actuarial accrued liability. A higher liability results in an unfunded status, while a lower liability results in a surplus. According to the OPM, the liability is a projection for current and future benefit obligations and considers contributions paid into and disbursements from FERS. Overall, the liability is based on estimated demographics for the entire federal government, including the Postal Service.
However, the Postal Service’s benefits paid represent actual demographic behavior, such as early career turnover, and not the aggregate, resulting in a surplus status for the Postal Service and an unfunded status for the federal government.
Based on this data, the Postal Service’s overfunding issue is even larger than we previously reported. Similar to what we have noted in other OIG retiree benefit reports, Postal Service Based on this data, the Postal Service’s overfunding issue is even larger than we previously reported. Similar to what we have noted in other OIG retiree benefit reports, Postal Service ratepayers continue to pay more than their fair share of retiree benefits. It is important that the trend of overpayments does not continue. The Postal Service faces a challenging future and its responsibilities and the true cost of funding postal operations needs to be absolutely clear. To address that challenge, the Postal Service is making operational changes to bring costs in line with revenue projections. Additionally, it is pursuing legislative changes to address concerns raised about pension and retiree health benefit payments. We believe management should also consider the FERS overfunding issue as the Postal Service pursues legislative changes.
Having retirement expenses commingled with the federal government’s budget, while being expected to operate as an efficient business, puts the Postal Service in a precarious position. The surplus in the CSRDF effectively subsidizes appropriated tax dollars when it could be used to offset the Postal Service’s current and future business expenses.
Conclusion:
The Postal Service has opportunities to use at least $5.5 billion of the $6.8 billion in FERS surplus funds to address its current and future financial condition. We found the Postal Service continues to overfund its retirement obligations and there is no present legislation to resolve surpluses. Further, it is vital that the Postal Service’s responsibilities be clearly delineated and separated from those of the rest of the federal government. The overcharges associated with CSRS obligations, coupled with the FERS surplus discussed in this report, have adversely affected the Postal Service’s financial position, hindered its ability to operate efficiently in a business-like matter, and hindered its transformation under the Postal Accountability and Enhancement Act (PAEA). Action is needed to prevent a repeat of historical trends in the overfunding of Postal Service retiree benefits.
Read the full USPS OIG report.
Editorial: Does the Postal Service Really Want Early Retirements?
Filed under: Articles, CSRS, FERS, postal, postal news, retirement, usps, vera
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 the basic annuity amount. Was that to discourage early retirements so they can justify weakening the no-layoff clause in upcoming contract negotiations?
The method of calculating the FERS annuity supplement is explained by Robert F. Benson in What are “Deemed” Salaries in the FERS Annuity Supplement? If you have the necessary personal information, his software at http://www.fedbens.us/ will calculate the exact amount of your FERS annuity supplement. The PDF Attachmenthas an example.
Most postal employees in FERS are eligible for the annuity supplement after age 55 with 30 years of service, but in a VERA, RIF, or involuntary transfer over 50 miles that requirement is reduced to 20 years–a significant bonus. Federal law enforcement officers, like Postal Inspectors and OIG, are eligible for the FERS annuity supplement at age 50 with 20 years of service.
OPM’s Handbook, Chapter 40, Section 40A2.1-3.N, requires the Postal Service to furnish this information for eligible FERS employees.
The Postal Service also neglects to mention another advantage in an early retirement. The funds in your Thrift Savings Plan may be withdrawn after retirement and age 55 without an IRS early withdrawal penalty. If you retire before age 55, you can avoid an IRS early withdrawal penalty by choosing an annuity. See Important Tax Information About Payments From Your TSP Account
Don Cheney
Auburn WA
Senator Ted Stevens Was The “Father of FERS”
Former Alaska Senator Ted Stevens was a longtime advocate for federal employees. Stevens played a key role in the creation of the Thrift Savings Plan, a 401(k)-type retirement savings program. He also was one of the original sponsors of the 1993 Family Medical Leave Act, which provides 12 weeks of unpaid leave. A moderate Republican, he served longer than any other Republican in history.
When Republicans controlled both houses of Congress, Senator Ted Stevens used his position as Chairman of the Senate Governmental Affairs Committee to block any cuts to CSRS, FERS and TSP. Without his help, federal employees’ benefits would be a lot worse today.
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/10/AR2007011002372.html
Thrift Savings Plan – The Model for all 401(k) Plans!
Ted Stevens – Father of FERS
http://www.federalnewsradio.com/?nid=319&sid=1576147