According to the Wall Street Journal, The US Postal Service may delay the next rate increase until 2006. The reason is due to a change in how it contributed to a retirement fund for employees hired before 1984.
The Senate voted its approval on a bill last week that would allow the agency to make the change. The House is expected to follow suit this week. The administration also supports the change.
According to what we reported here several months ago, a review found that investments made by the Treasury Department had generated better returns than the agency had anticipated. The effect is that the agency owes $27 billion less than anticipated.
The legislation would require the Postal Service to use the extra money for reducing debt through fiscal 2005. The savings could not be used to pay bonuses for postal executives.
Recent rate increases have exceeded inflation and probably had an impact in driving more customers to pay bills online or to use alternative services such as Federal Express or the United Parcel Service. Delaying the increase may help the Postal Service retain more of its customers.
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