OPM: USPS projected pension surplus shrank

By Bernie Becker - 11/13/12 09:33 PM ET

The cash-strapped U.S. Postal Service has less of a surplus in a pension fund than previously thought, the federal government told the agency late last month.

John Berry, the director of the Office of Personnel Management, said that the surplus in the Federal Employees Retirement Service had shrunk to $2.6 billion in 2012, down from almost $11 billion last year.

Berry told Postmaster General Patrick Donahoe, in a letter obtained by The Hill, that a drop in long-term interest rates was the main cause for the decline in the surplus.

The Postal Service, which is bleeding millions of dollars a day, has been hoping to use the FERS surplus to help stabilize its financial situation. USPS has also defaulted on two separate prepayments for retiree healthcare this year, and has incurred steep losses for years.

Postal legislation passed by the Senate this year would allow the agency to use the overpayment to incentivize postal workers into retirement. Emily Spain, a spokeswoman for Sen. Tom Carper, a sponsor of that measures, said the Delaware Democrat was reviewing OPM’s findings.

“During this process, it will be necessary to look at whether OPM is using the correct assumptions to calculate this new surplus and if using USPS-specific assumptions would result in a more accurate assessment of what the United States Postal Service is owed from the Federal Employees Retirement System (FERS),” Spain said in a statement.

The letter from OPM comes as lawmakers on both sides of the aisle are still hopeful that broad reforms to the Postal Service can be passed before this Congress runs out.

A House GOP bill, sponsored by the Oversight Committee chairman, Rep. Darrell Issa (R-Calif.), did not receive a floor vote before November’s elections.

Republican supporters of the bill have cautioned that the FERS overpayment was just a projection, and should only be spent in a comprehensive restructuring of USPS.

But Rep. Dennis Ross (R-Fla.), Issa’s cosponsor on that bill, has also said that the FERS overpayment is one potential area of compromise with the Senate.

Donahoe said this year that giving USPS access to the overpayment would help ease the service’s cash flow issues and pay down its debt. The Postal Service recently reached its debt limit, and can’t currently borrow any more from the Treasury.