Senate Postal Bill Includes Pension and Federal Workers Compensation Reforms

By on August 5, 2013 in News

Legislation has been introduced in the Senate to reform the ailing Postal Service.

The Postal Reform Act of 2013, introduced by Tom Carper (D-DE) and Tom Coburn (R-OK) would make a number of changes to the organization, such as health care and pension reforms. The act would also reform the workers compensation program for all federal employees.

Some of the key components of the legislation include the following:

Pension Reforms

The PRA would require that the Office of Personnel Management (OPM) use data in determining how much the Postal Service must pay into the two federal pension programs – the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS) – that more accurately reflects the amount of the Postal Service’s projected liability, in light of differences between the postal and non-postal federal workforces. This reform is expected to reduce the amount the Postal Service pays into both FERS and CSRS and to result in a Postal Service FERS surplus. The Postal Service would be permitted to request and receive up to $6 billion of any surplus, which could be spent to retire Postal Service debt and give it needed liquidity.

In addition, the bill would allow the Postal Service and postal unions to bargain over the extent of new postal employees’ participation in FERS and the Thrift Savings Program (TSP).

Health Care Reforms

The PRA would eliminate the Postal Service’s statutory retiree health pre-funding and replace it with a less aggressive 40-year amortization of the Postal Service’s retiree health liability. This provision, combined with language allowing premiums for current retirees to come out of the account containing health care funds that the Postal Service has already pre-funded, could reduce the Postal Service’s total retiree health costs by roughly half. Those costs could be reduced even further through the implementation of provisions in the PRA requiring that 1) health plans be created to meet the needs of postal retirees enrolled in Medicare parts A and B, some of whom currently purchase full Medicare and Federal Employees Health Benefit Plan (FEHBP) coverage; and 2) postal retirees not enrolled in Medicare be given the opportunity to do so penalty-free. Participation in Medicare parts A and B and these new health plans would be voluntary, but these two provisions are expected to increase Medicare enrollment among postal retirees and significantly reduce the Postal Service’s long-term retiree health liabilities.

In addition, the PRA would also allow the Postal Service and the postal unions to bargain over the creation of a new health plan for postal employees, either within or outside of FEHBP.

Service Changes

  • The Postal Service last year proposed a service standard change for certain classes of mail that would have largely eliminated the overnight delivery of mail and led to the closure or consolidation of a significant number of mail processing plants. The PRA would place a moratorium on service standard changes and plant closings for two years, keeping all plants open as of the date of enactment in operation for the duration of the moratorium.
  • The PRA would codify the Postal Service’s current plan to find savings in its retail operations without closing post offices.
  • The PRA would preserve Saturday delivery for at least a year.
  • The PRA would require the Postal Service to use the most cost effective means of mail delivery, requiring centralized or curbside delivery for new addresses and business addresses. It would also require the Postal Service to seek to convert residential addresses from door delivery to centralized or curbside delivery on a voluntary basis.

Revenue and Innovation

  • The PRA would streamline the current rate-setting process, giving the Postal Service more authority to set prices on its own while preserving a more flexible CPI rate cap until 2016, when the rate cap would expire.
  • The PRA would give the Postal Service enhanced authority to innovate and introduce new non-postal products that take advantage of its retail and mail processing, transportation, and delivery network.
  • The PRA would authorize the Postal Service to offer services on behalf of federal, state, or local government agencies.
  • The Postal Service is prohibited under current law from shipping beer, wine, and distilled spirits. The PRA would lift this prohibition and allow the Postal Service to deliver beer, wine and distilled spirits under the same rules as private sector shippers.

Federal Workers Compensation Reform

Benefits would be cut for federal workers injured on the job once they reach retirement age.

Workers compensation currently provides federal employees 66 2/3% of their basic salary tax-free once they reach retirement age, and 75% if employees have dependents. Related medical expenses are also covered.

Under the proposed legislation, federal employees would get 50% of their salary once they reach retirement age, and additional compensation for dependents would no longer be provided.

Speaking on the legislation, Senator Carper said, “One year ago, the United States Postal Service defaulted for the first time in its history. Although the situation is dire, it isn’t hopeless. The bill that Dr. Coburn and I introduced last night presents a comprehensive and bipartisan solution to the Postal Service’s financial challenges that would prevent collapse, protect millions of mailing industry jobs, and enable this critical institution to serve the American public for years to come. This bill isn’t perfect and will certainly change as Dr. Coburn and I hear from colleagues and stakeholders, including postal employees and customers. But the time to act is now. It is my hope that Congress and the Obama Administration can come together to enhance this plan in order to save the Postal Service before it’s too late.”

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

22 Replies

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  1. guest says:

    Changes in the federal workers’ compensation program have been needed for many years. As a WC program manager for 30+ years, I have seen cases where employees have been on WC for many years receiving 75% of their pay, tax free. These recipients are receiving more money than if they were working. Not a very good incentive to return to work. Some of these employees have been on WC for 30 years for a sprain/strain that has long been resolved. The Office of Workers’ Compensation has been reluctant to make changes in those cases where the recipient is 60 or older. These compensation benefits are charged to the agencies where the recipients are/were employed. These changes are a good start but many more are needed. The next step should be to take a close look at the continuation of pay regulations and the freedom to change physicians multiple times.

  2. YesterDay4 says:

    Pay reform: They get a 25% cut, and “wee” get a 25% increase … there it’s a balanced budget amendment.
    Retirement reform: they can’t, and “wee” become vested after 4 days in office, and tell OPM to keep up the good work … balanced again. wee deserve 5 weeks off.

  3. redauburn says:

    I think all government offices should be mandated to use the Post office for shipping and mailing and stop using UPS. Then the govt pays the govt for shipping etc. We are making another company rich and derailing the USPS.

    • mandinka says:

      Just as soon as they start delivering the same level of service as competition. USPS is in this predicament because the union tail is wagging the dog

  4. redauburn says:

    I think the govt should find a short and long term disability plan that requires the employee to pay into it and then if something happens, they get paid. The govt should not have to pay for everything like that. Workman’s comp should only be a temporary thing and if the problem is permanent then the long term disability would kick in (that the employee paid into)

  5. MikeJ21235 says:

    Stop paying for the high priced contractors and use full time employees instead. The gov uses a lot of contractors and they’re all over paid. I had a friend retire from the gov and then come back as a contractor and he said he made far more as a contractor than he did as a grade 15 gov employee.

    • mandinka says:

      amazing that every fed who works for a contractor makes so much $$$ but when the facts are revealed its a just more PAP

      • Eva B says:

        What “facts” are you using? Every federal agency I worked for that employed contractors paid them at least 1 and 1/2 times more than my salary for the same kind and level of work. And that was excluding benefits.

  6. A T says:

    Its a good plan…….just implement it

  7. mandinka says:

    The USPS has an annual deficit of over $4B a year. Eliminating the 80,000 employees that don’t have a full time job and just show up would eliminate that figure entirely

  8. David says:

    The United States Postal Service processes 160 billion pieces of mail each year. According to current reports the United States Postal Service is running a 4 billion dollar a year debt. This means that a average increase of 3 cent per piece of mail would more than cover the current rate of debt. There are many ways to do this, but this is what I suggest: First Class mail should be raised to 50 cents per ounce. This would enable 20 first class stamps to be bought for $10.00. No need to make change. Time saved! The mail that is commonly referred to a junk mail could have the postage raised 1 cent per piece of mail. Other rates and fees could be adjusted upward not to exceed a 1% increase in these fees and charges. It is my opinion that this plan would be welcome by the public as a viable alternative to the anticipated closures of post offices all across the United States of America, and anticipated cutbacks on delivery services to the public and to businesses.

    • Richard Jefferson says:

      David. The reason the USPS ran a debt is because Congress levied a law on them, and only them, to require them to fully pay upfront all retirement costs of any employee. That law was and is ludicrous. No other federal agency front loads retirement nor do any in the private sector. If Congress were to remove the law, the USPS would be more than solvent.

      • OldRet says:

        Tell me if I’m wrong but don’t postal employees get a BIG break on paying for their health care? Maybe if the employees paid more then they wouldn’t be in such dire circumstances!

        • Hopeisnot_A_Plan says:

          USPS employees do pay a bit less for their health insurance. They also do not get locality pay like other Feds. I would bet they would gladly pay what other Feds pay for health insurance in exchange for locality pay.

          • mandinka says:

            if they were to receive locality pay it would be ZERO. Seeing as how competitions labor expense is far far lower than USPS

      • mandinka says:

        Yet the private sector falls under those rules. A much better solution is privatization. Canada has done it with twice the area of the US and does it for only 10 cents more in postage

        • Eva B says:

          No, the private sector does not fall under those rules. Where are you getting your information?

  9. Robert Benson says:

    The recent bill introduced to reform Federal and postal pay & benefits calls
    for OPM, in calculating how much should be deposited into the retirement fund, to
    use data about the “differences between the postal and non-postal federal
    workforces.” What?! Two questions occur to me:

    1.When has a retirement system ever taken a look at the “differences” between two or
    more classes of workers in the same retirement system? What’s next? What is your weight? How
    much do you smoke and/or drink? How long did your parents live? What are your plans for promotion?

    2.Just exactly what are the “differences” to which they allude? Why are these “differences” not specified? I think I know, and if I am right, then it is shameful (and understandable) the proposed legislation keeps this undisclosed.

    Congress needs to re-think this one, and back off.

    • TheRealOldFed says:

      I agree. I would like to know exactly what “differences” they are referring to. And it would be unfair and discriminatory (in my opinion) to require postal employees to pay more into FERS or CSRS. The USPS has already overfunded CSRS by hundreds of billions of dollars, and FERS by half that. And they are only going to allow them to recoup 6 billion of that overpayment? The overpayments have been audited by at least 3 different agencies, and they do exist. The GAO gave the gov’t an out by saying there was no statutory requirement for the overpayments to be returned. The gov’t has been using the USPS as a cash cow for many, many years. They don’t want to give that up, even though they have nearly killed the cow with their 5.5 billion a year future retiree health fund pre-payment requirement.

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