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OIG Report : USPS Retirees Prefunding Overpayments - June 2012

OIG Report : USPS Retirees Prefunding Overpayments - June 2012

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Published by PostalReporter.com

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Published by: PostalReporter.com on Jun 22, 2012
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06/22/2012

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OFFICE OF
INSPECTORGENERAL
UNITED STATES POSTAL SERVICE
Pension and Retiree Health CareFunding LevelsManagement Advisory Report
Report Number FT-MA-12-002
June 18, 2012
 
 
IMPACT ON 
The
U.S. Postal Service’s compliance
with the Postal Accountability andEnhancement Act of 2006 for prefundingretiree health care benefits.
Our objective was to explore theprogress on funding pension and retireehealth care benefits as of September 30, 2011.
The Postal Service has funded itspension benefit obligations at nearly105 percent and is currently overfundedby $13.1 billion. The law does not allowthe Office of Personnel Management toalter the contribution formula for thePostal Service, nor can it refund currentor future surpluses. Although the PostalService continues to implement changesto align costs with revenue, action isneeded now to use the current andfuture surpluses to remain a viablebusiness.Further, the Postal Service is required tofully fund its future retiree health carebenefit obligations. Currently, thePostal Service has funded nearly50 percent of that obligation. As analternative to the annual prefundingpayments, which has been difficult, weestimate the Postal Service
’s f 
air marketvalue of real property totals $85 billionand would be enough to cover theremaining unfunded obligation of $46 billion. Recognition of these assetsthat could be applied to the liability, if ever needed, could prevent theprefunding payments from increasingPostal Service debt.
We recommended that managementpursue legislative action to refundcurrent and future pension surpluses tothe Postal Service.
 Although management did not agree or disagree with the monetary impact, theyagreed with the recommendation andwill continue their support of pendinglegislation that would address theFederal Employees Retirement Systemsurplus. They will also evaluate allpension assets and liabilities prior to thestart of the new session of Congress inJanuary 2013, and will pursuelegislation as appropriate.
The OIG considers management’s
comments responsive to therecommendation and corrective actionsshould resolve the issues identified inthe report.
 
 
June 18, 2012
Pension and Retiree Health CareFunding Levels
Report Number FT-MA-12-002
 
 June 18, 2012
MEMORANDUM FOR:
JOSEPH CORBETTCHIEF FINANCIAL OFFICER ANDEXECUTIVE VICE PRESIDENTMARIE THERESE DOMINGUEZVICE PRESIDENT, GOVERNMENT RELATIONS ANDPUBLIC POLICY
FROM:
John E. CihotaDeputy Assistant Inspector Generalfor Financial Accountability
SUBJECT:
Management Advisory Report
 –
Pension and Retiree HealthCare Funding Levels(Report Number FT-MA-12-002)This report presents the results of our review of the pension and retiree health carefunding levels for the fiscal year ended September 30, 2011 (Project Number 12BS001FT000).We appreciate the cooperation and courtesies provided by your staff. If you have anyquestions or need additional information, please contact Lorie Nelson, director,Financial Reporting, or me at 703-248-2100. Attachmentscc:
 
Stephen J. Masse
 
Timothy F. O’Reilly
 Sheila T. MeyersCorporate Audit and Response Management

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