1/13/2020 The U.S. Postal Service, or USPS, just closed its 2019 fiscal year books in November, and things aren’t looking so good as it heads into the new year. Unfortunately, its solution is the proposed USPS Fairness Act, which would eliminate the prefunding of health benefits — essentially putting federal workers on a plan similar to Social Security.
The U.S. Postal Service, or USPS, just closed its 2019 fiscal year books in November, and things aren’t looking so good as it heads into the new year.
It has a whopping $120 billion in pension and other post-employment unfunded liabilities. That’s an amount equal to the GDP of Ukraine. It’s no surprise, then, that Congress has started looking for ways to remedy this. Unfortunately, its solution is the proposed USPS Fairness Act, which would eliminate the prefunding of health benefits — essentially putting federal workers on a plan similar to Social Security.
Here’s why that would be a bad idea.
See, pay-as-you-go systems, like Social Security, are where the revenue for current retirees’ benefits is generated from those who are actively employed. This means that future generations will be footing the bill for today’s workers. And with the U.S. population aging, that puts a heavy burden on the current and future workforce.
Moreover, pay-as-you-go systems are inherently more expensive, because they’re missing out on investment returns. Interest can only be gained through invested assets. If no contributions are made to a pension fund, there are no assets to invest and, thus, no interest is earned. As such, pay-as-you-go systems are typically considered the most expensive and inefficient ways to pay for post-employment benefits.
Read full story from MarketWatch
Contrary to the kool-aid the unions put out, the retiree healthcare account is grossly underfunded….but it’s not like the USPS is writing that check anyway….as an employee you want that check written, so you’re not put into Medicaid when you retire.
You are correct that the true facts are hard to come by. The Post Office
is unlike anything. Government, or private business.
Watch out
Unfortunately they did not cover the whole story. What they are now telling you is that this supposed sum of money that is “prepaid” for retirement funding is nothing more than a cash cow for the government to dip into and fund other programs. It is NOT THERE. Yes it is on “paper” as being there but in all actuality it’s already spent. Gone. There is not “profit gain” on the money at all because it does not actually exist. You cant give interest or gains on money that is NOT THERE!! The USPS can no longer raise rates to give Congress or the House free billions to use at their whim. USPS was paying the govt 8.5 billion dollars a year above actual retirement and health benefits. What if you had to not only pay your electric bill and pay it again the same month?
Now imagine having to pay your health insurance and paying the same amount again the same month!
No business can survive doing that!
I dont know how much other costs the USPS has to pay to the govt in the same manner… the USPS deficits are caused by poor govt. My opinion. They are supposed to be a self sustaining dept of the govt but they cant sustain themselves when the govt keeps their fingers in the cash register.
We are the only government branch to have to pre fund our health care for 70 plus years in advance. You seemed to miss pointing out that fact .
Really poor to quote an op-ed from market watch and try to push it as reported news. It should be noted that the prefunding mandate required the post office to fund retirement benefits different from EVERY OTHER FEDERAL AGENCY. If the post office has to do it, all federal agencies should operate under the same guidelines. If we must fund this differently, the US Treasury should pay up the $2.5 trillion of USPS pension fund congressionally mandated in government bonds, and allow us to invest that in something that actually makes a return. Please do more research before publishing
Sooooooo stay on course is the best option. Pre fund retirement/health benefits for people who haven’t been born yet, infact the parents of the supposed people who ” might ” become employees of the Postal service haven’t been born yet need to have their pension/health benefits funded. That’s an asinine reason to not pivot.
The Libertarians think that Postal workers must have prefunded health care even though no one else is stuck with this burden. And when the funds run out, the postal workers must do without! If the prefunding is such a great idea then force every other employer to prefund health care! The Libertarians think that having single payer health care is somehow evil. If paying for a benefit that other people use is terrible, why are tax payers forced to pay for public education. Why am I responsible for other people’s children. Why must I pay for their education, recreation, and transportation? Isn’t that the responsibility of the parents? I owe the parents, in return they owe me nothing!
The story was the prefunding would require the post office to pay for employees 75 years into the future and that didn’t make sense. So now we are going 180 degrees in the other direction. Who do I believe, dumb or dumber?