A pension-fund surplus the U.S. Postal Service has been counting on to help dig out of its financial hole is smaller than previously estimated because of lower interest rates.
The projected excess in the Federal Employees Retirement System for benefits covering about 471,000 current postal employees shrank to $2.6 billion from $10.9 billion a year earlier, John Berry, director of the U.S. Office of Personnel Management, said in an Oct. 30 letter to Postmaster General Patrick Donahoe.
The lower estimated pension surplus adds to the financial woes of the Postal Service, which is scheduled on Nov. 15 to report its loss for the fiscal year ended Sept. 30. The agency has said it may lose $15 billion in fiscal 2012, during which it exhausted its borrowing authority from the U.S. Treasury. The service skipped two payments due to the U.S. Treasury totaling $11.2 billion for health benefits of future retirees, saying it couldn’t afford them.
Postal legislation the Senate passed in April would refund what was then an estimated $11 billion FERS account surplus and allow the post office to create its own health-benefits system. The Senate legislation would determine the repayment amount based on OPM’s analysis, meaning that sum would be less under the new estimate than it was when the bill passed.