USPostal Service suspends pensions payments

Facing a huge budget deficit and possible insolvency, the U.S. Postal Service is suspending its contributions to an employee retirement fund — for the first time in its history — to save $800 million this year.

The Postal Service will stop paying employer contributions to the Federal Employees Retirement System (FERS), which covers about 85 percent of career postal workers, according to a statement from the agency. With 596,000 workers, the Postal Service is the nation’s second-largest civilian employer after Wal-Mart.

pOSTAL SERVICE, pensionsThe $115 million that the agency pays to the retirement system every other week will stop on Friday.

The Postal Service reported a loss of $8.5 billion in fiscal year 2010, and is expected to lose $8.3 billion this year, according to The Washington Post.

The USPS is facing insolvency without approval to delay a $5.5 billion payment for worker health benefits, due in September. The Postal Service maintains that it has been overcharged $75 billion for its pension obligations and if that money is returned, the USPS could use the funds to pay for the health benefits.

The agency has pushed Congress to eliminate the requirement that it pre-pay health benefits, and it wants to end Saturday mail delivery.

The agency will continue to transmit employee contributions to the pension fund. The FERS account has a $6.9 billion surplus, according to Bloomberg.

Postal Service spokesman David Partenheimer says the suspension of employer payments for the retirement fund payments will have no impact on employees or current retirees.

The $800 million saved is "money we need to prevent us from running out of cash to pay employees and suppliers to keep the mail moving," Partenheimer told Newsmax.

Commenting on the USPS decision to suspend the payments, Gene Del Polito, head of the Association for Postal Commerce, which represents postal customers, told Bloomberg: “The Congress and the administration have left the Postal Service with no other choice. The money’s not there, and they can’t get any more from customers that already are fleeing the mail.”

The Postal Service is an independent agency of the U.S. government and essentially has received no direct taxpayer dollars since the early 1980s. However, its relationship with the federal government is complicated, and it must borrow from the Treasury, which does get tax money, to cover its shortfalls.

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