4 ms·

>literally no other company or business has to do. Actually every other company and business HAS to do this. Ever wonder why private pensions went away? I als

>literally no other company or business has to do. Actually every other company and business HAS to do this. Ever wonder why private pensions went away? I also am always amazed at how people point to this funding requirement as a bad thing. So it is now bad...to actually set money aside for benefits you are promising????

micromacrofoot 5y ago
The USPS needs to pre-fund their medical promises for retirees, but can't cancel those benefits without an act of congress... this is actually one of the unique bits. The private sector can just cancel those medical benefits at any time. Really those benefits should be shifted to Medicare and the burden should be taken off of the USPS. Also, private companies need to pre-fund these retirement benefits too (with fewer general restrictions so they can change if they're having financial issues) but no other government agency other than the USPS has to. The timing of the pre-funding legislation was also a little problematic because they had to rapidly catch up... this hamstringed their capital for about a decade so they put a lot of modernization initiatives on hold. Then toss in a pandemic and the fact we're stuck with a sycophantic postmaster general and you've got a screwed postal system.
wan23 5y ago
Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet. Even worse, they have to borrow to meet this requirement to hold cash they won't need for years, so now they're paying interest instead of earning it.
- NovemberWhiskey 5y ago
  >Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet If that's meant to be a description of the USPS situation then it's not at all accurate. The USPS is required to calculate its actuarial liability for its retirement fund by considering both current and future liabilities for the next 75 years (I think that's the part where I think you're getting 'setting aside cash for the retirement of people who haven't even been hired yet'). That is true. But it also deducts from that liability the expected future accruals (i.e. the contributions to the pension fund that those people who haven't been hired yet will make). I think you can probably agree that you need to do both of these things when considering the sustainability of a pension fund, no?

micromacrofoot 5y ago

The USPS needs to pre-fund their medical promises for retirees, but can't cancel those benefits without an act of congress... this is actually one of the unique bits. The private sector can just cancel those medical benefits at any time. Really those benefits should be shifted to Medicare and the burden should be taken off of the USPS. Also, private companies need to pre-fund these retirement benefits too (with fewer general restrictions so they can change if they're having financial issues) but no other government agency other than the USPS has to. The timing of the pre-funding legislation was also a little problematic because they had to rapidly catch up... this hamstringed their capital for about a decade so they put a lot of modernization initiatives on hold. Then toss in a pandemic and the fact we're stuck with a sycophantic postmaster general and you've got a screwed postal system.

wan23 5y ago

Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet. Even worse, they have to borrow to meet this requirement to hold cash they won't need for years, so now they're paying interest instead of earning it.

NovemberWhiskey 5y ago
>Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet If that's meant to be a description of the USPS situation then it's not at all accurate. The USPS is required to calculate its actuarial liability for its retirement fund by considering both current and future liabilities for the next 75 years (I think that's the part where I think you're getting 'setting aside cash for the retirement of people who haven't even been hired yet'). That is true. But it also deducts from that liability the expected future accruals (i.e. the contributions to the pension fund that those people who haven't been hired yet will make). I think you can probably agree that you need to do both of these things when considering the sustainability of a pension fund, no?