4 ms·

I don't get it. Why is it unreasonable? If I promise to pay somebody $40,000 every year after they retire, but I don't set aside money to do it, you can guara

by three14 15y ago

I don't get it. Why is it unreasonable? If I promise to pay somebody $40,000 every year after they retire, but I don't set aside money to do it, you can guarantee that down the road, I'll come crying to the government to get them to pay for it. It's not like they have to set aside the future value of that promise, just the present value - in other words, the amount that they're effectively promising to the employees today. It should be considered fraud if they don't do this.

deleted 15y ago
[deleted]
_delirium 15y ago
That's a reasonable argument for a general change in accounting standards, requiring all pension plans to be pre-funded. Specifically requiring the USPS and nobody else to do that, though, feels more like something political is going on.
- three14 15y ago
  ...and I strongly support the general accounting change, particularly for government or semi-governmental entities that might be counting on taxpayers footing the bill they run up. Just because USPS suffers by having to do something reasonable because of politics doesn't mean that it's a bad idea.
  - ubernostrum 15y ago
    It's unreasonable to impose a much tougher standard on one and only one organization, even if you think that standard would be good if applied to everyone.
    - three14 15y ago
      Even if true that it's only the USPS, and yummyfajitas implies that it's actually a broader requirement, here it's a difference between a mistake and not making a mistake. It's not simply an accounting treatment. It's not a defense of the USPS to suggest they should be allowed to make the same mistake that other companies make.
      - ubernostrum 15y ago
        They should be subject to the same standards as other companies. If they aren't, that's unreasonable.
        amorphid 15y ago
        As a business owner concerned about cash flow, I can tell you that paying for anything in advance is always a pain. Reasonable or not, setting aside enough cash to fund the retirement needs of all their workers for 75 years and generating that cash from revenue sounds like a huge pain.
    - dpatru 15y ago
      It's not unreasonable from the taxpayers' perspective to require the Postal Service to fund its pension obligations as they are incurred. And this is also not unreasonable from the employees' perspective. When the US government runs out of new creditors (as has already happened to Greece and Italy) employees who are relying on government revenues for their pension will be out-of-luck.
- mitchty 15y ago
  Yep, the political angle reason why is that all of the prefunded pensions help national debt forecasts as they count as income against national debt.
- yummyfajitas 15y ago
  Correct me if I'm wrong, but isn't this the same standard required by the PPA for pretty much every private company? http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L&summ2=m&#38 http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L&#3...;
ssmoot 15y ago
What happens with inflation and interest over that 75 year span? Does the mandate to pre-pay use some formula to take that into account? I'm not familiar with general accounting practices, but it seems like if it didn't it would be potentially forcing the business to save far in excess of the funds necessary to meet it's obligations when the bill actually comes due?
- alttag 15y ago
  No. As I understand GAAP, the projected inflation and projected income (including interest) are taken into account at least annually. The company then pays the delta (or underpays the next installment by the delta, if appropriate). A problem many govt agencies had over the past decade (even before the collapse) was too conservative of estimates on inflation and too exuberant estimates of interest. There was, for example, a federal policy (law, IIRC) passed early in the decade (2004-ish?) that many school districts and other agencies struggled with.

by three14 15y ago

deleted 15y ago

[deleted]

_delirium 15y ago

That's a reasonable argument for a general change in accounting standards, requiring all pension plans to be pre-funded. Specifically requiring the USPS and nobody else to do that, though, feels more like something political is going on.

three14 15y ago
...and I strongly support the general accounting change, particularly for government or semi-governmental entities that might be counting on taxpayers footing the bill they run up. Just because USPS suffers by having to do something reasonable because of politics doesn't mean that it's a bad idea.
- ubernostrum 15y ago
  It's unreasonable to impose a much tougher standard on one and only one organization, even if you think that standard would be good if applied to everyone.
  - three14 15y ago
    Even if true that it's only the USPS, and yummyfajitas implies that it's actually a broader requirement, here it's a difference between a mistake and not making a mistake. It's not simply an accounting treatment. It's not a defense of the USPS to suggest they should be allowed to make the same mistake that other companies make.
    - ubernostrum 15y ago
      They should be subject to the same standards as other companies. If they aren't, that's unreasonable.
      - amorphid 15y ago
        As a business owner concerned about cash flow, I can tell you that paying for anything in advance is always a pain. Reasonable or not, setting aside enough cash to fund the retirement needs of all their workers for 75 years and generating that cash from revenue sounds like a huge pain.
  - dpatru 15y ago
    It's not unreasonable from the taxpayers' perspective to require the Postal Service to fund its pension obligations as they are incurred. And this is also not unreasonable from the employees' perspective. When the US government runs out of new creditors (as has already happened to Greece and Italy) employees who are relying on government revenues for their pension will be out-of-luck.
mitchty 15y ago
Yep, the political angle reason why is that all of the prefunded pensions help national debt forecasts as they count as income against national debt.
yummyfajitas 15y ago
Correct me if I'm wrong, but isn't this the same standard required by the PPA for pretty much every private company? http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L&summ2=m&#38 http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L&#3...;

ssmoot 15y ago

What happens with inflation and interest over that 75 year span? Does the mandate to pre-pay use some formula to take that into account? I'm not familiar with general accounting practices, but it seems like if it didn't it would be potentially forcing the business to save far in excess of the funds necessary to meet it's obligations when the bill actually comes due?

alttag 15y ago
No. As I understand GAAP, the projected inflation and projected income (including interest) are taken into account at least annually. The company then pays the delta (or underpays the next installment by the delta, if appropriate). A problem many govt agencies had over the past decade (even before the collapse) was too conservative of estimates on inflation and too exuberant estimates of interest. There was, for example, a federal policy (law, IIRC) passed early in the decade (2004-ish?) that many school districts and other agencies struggled with.