Skip to comments.How many federal and postal workers can retire?
Posted on 05/20/2011 8:01:18 AM PDT by Poundstone
About 550,000 full-time career federal government and U.S. Postal Service could hang it up and move on at anytime because they are eligible to retire, according to government statistics. The eligible workers represent about a quarter of the 2.4 million permanent full-time employees collecting government or postal paychecks.
(Excerpt) Read more at washingtonpost.com ...
From things I hear here in Washington DC, I think a tidal wave of federal employees are already starting to retire, almost all of them motivated by fear a significant reduction in retirement benefits could be coming for those who don’t retire soon.
Glad I retired last year!
From my observation at the local Post Office, many have already. Unfortunately since they still wear the uniform and show up, they still get paid.
The FERS system implemented back in the mid 1980s whacked the devil out of the retirement system leaving a substantial load to be carried by the employees' 401(k) (equivalent) funds.
If you merely implemented the current FERS system on state and local employees you'd probably cut the payouts by 50%, or more than that for systems that allow "spiking". As you know the federales do not benefit from "spiking".
The requirements are simple ~ easily met by honest people.
There are always accountants and such who imagine they can make MORE ON THE OUTSIDE which, combined with their retirement, might make them RICH.
Look, since retirement I've had at least one surgery per year (which is pretty common I understand) with one 9 month period of enforced convalescence.
When you retire you have to imagine getting sick for an extended period. It happens a lot.
Congress helped (more than usual) to create this problem by refusing to let the Postal Service restructure and downsize years ago.
It forced USPS to stay in “business” at artificial levels solely to artificially “fund” the USPS pension plan.
Of course, the backup plan was a federal bailout, which the corrupt congresscritters betted on being able to sell once the problem reached a tipping point.
We shall see.
Most of the postal workers I see aren’t even wearing a uniform any more.
I regularly see people delivering mail from USPS mail trucks wearing whatever they please.
Actually I did look into it once - after the company I was working for folded and screwed me out of back pay and vacation. At the time, even though I am a veteran, the waiting list to be hired was at least two years long.
Always a long waiting list ~ unless the economy is booming. We had a problem back in 1969. That was the old Post Office Department. Wages were too low and we were short about 100,000 employees.
Our family has had five instances of missing or delayed mail in the past few months.
You are right, they’re retired but still standing there in the post office.
What Congress did that hurt the most was done in the enabling legislation passed back under Richard Nixon. That was to restrict USPS' ability to ELIMINATE BUILDINGS.
It's totally bizarre.
In the late 1970s I did a study that demonstrated that USPS could get rid of over 25,000 "buildings", restructure rural route service, and save $800,000,000 per annum (now probably worth $10,000,000,000.
About funding retirement, that was one of the Leftwingtard senators from maine who forced USPS to pay AHEAD on "future retiree" medical insurance. They have to pay $5 billion a year into a fund that is supposed to take care of that in the future.
So, how many companies pay ahead on medical insurance for retirees?
I know the answer ~ and the names, but can you name even one of them?
At the same time USPS is ahead by about $78,000,000,000 in paying for regular retirement costs for future retirees.
No other agency of government has made such advanced payments at those levels.
What that means is USPS' employees are being used by the Obamistas to subsidize the US government.
550,000 full-time career federal government and U.S. Postal Service are eligible to retire.
You can bet the media will report Obama creates 550,000 new jobs.
“I really doubt the federales fear a reduction in retirement benefits. As you know, they get nowhere near what their counterparts (if any) in state and local government get.”
Your statement is largely misinformed about benefits and ignorant about the impact of the coming financial meltdown. Federal retirement compensation matches or possibly exceeds the most lavish state plans. You are focusing on the benefit rate (1% compared to 2.5%) for the most lavish state plans (benefit rates are 3% for law enforcement in some state plans). You are missing some very important components of retirement compensation that compensate for the lower benefit rate. Federal employees contribute less than 1% (0.8% I believe) for the defined benefit plan. The federal government contributes 11.2% but this contribution is different than state contributions because the federal government does not have portfolio to support benefits. the defined benefit plan for federal employees provides an early retirement bonus. From age 57 to 62, federal retirees receive an additional payment to provide essentially early Social Security benefits. Federal pensions are substantially increased by a generous COLA (CPI-W - 1). No state plan has anything close to the same COLA. Federal government retirees also receive generous early retiree medical benefits. Federal retirees must pay the same rate as employees, a very large benefit. Early retiree medical benefits exist in some state and local government plans. In addition to these lavish benefit levels, federal retirees also have a 401K plan in which the employer contributes 5 percent. The combination of the very low employee contribution, early Social Security subsidy, COLA, medical benefits, and 401K plan are on par with the best state/local government plans.
The federal government has no portfolio to support federal retiree benefits. There are large unfunded liabilities (more than $1 trillion) for federal pensions. The federal government will be forced to substantially reduce spending either directly or indirectly in the coming decade. It looks like indirect reduction through a substantial decline of the dollar will occur. Federal pensions will not be spared in the coming financial meltdown. Your federal pension just like other forms of government spending are not secure. It is basically dependent on the full faith of the government which will not be worth much in the coming decades.
“The federal government has no portfolio to support federal retiree benefits. There are large unfunded liabilities (more than $1 trillion) for federal pensions.”
You forget one huge difference between Federal pensions and state/local pensions: unlike states and cities, the federal government can print money to pay its obligations.
You do allude to the danger of inflation, which is proper. But in that case, federal retirees will suffer the effects just like every other American.
“You do allude to the danger of inflation, which is proper. But in that case, federal retirees will suffer the effects just like every other American.”
I agree with your assessment with one caveat. With CPI-W - 1 indexing, federal pensions (and Social Security) will keep pace with inflation at least conceptually. Unfortunately, COLA indexing for many types of federal programs may lead to an inflation spiral. At some point, no one will want dollars so COLAs will not matter. Massive reductions in government spending will be necessary to restore the dollar value. Without massive realignment of government spending (including pensions), individuals will hold other currency or barter.
The USPS is part of the federal government despite the phony claims that it is independent. The federal government including the USPS has large levels of retiree health care. I doubt that any retiree health care payments matter because there is no portfolio to support retiree health care. The USPS is not being used to subsidize other areas of the government. The opposite is true. The USPS has been provided recurring subsidies. The USPS is engaged in a misinformation campaign to dump its unfunded pension liability on other areas of the government.
Then they stay away for a while and get rehired to again.
“Without massive realignment of government spending (including pensions), individuals will hold other currency or barter.”
Well, I don’t think we’re going to sink to a Germany 1923 type of situation. And at any rate, federal pensions are such a tiny part of the federal budget that I don’t see the federal government altering the COLA formula for current retirees. For future retirees, possibly including many current employees — maybe.
“Well, I dont think were going to sink to a Germany 1923 type of situation. And at any rate, federal pensions are such a tiny part of the federal budget that I dont see the federal government altering the COLA formula for current retirees. For future retirees, possibly including many current employees maybe.”
We are headed for dire economic times if substantial changes to government spending are not made. Contrary to your uninformed assertion that pensions are not a substantial unfunded liabilty, a USA Today article indicates that the unfunded liability of federal civilian and military pensions is $5.3 trillion in today’s dollars. This liability grows at $300 billion per year. A substantial increase in inflation will balloon the unfunded liabilities much higher with the COLA.
Your optimism is based on wishful thinking. Government spending including federal pensions will be substantially reduced directly or indirectly. The levels of current government spending and future spending are unimaginable. The world will not sit by idly as our printing presses generate trillions of new dollars.
I've computed out all of my deposits over the years, allocated interest to them using the current T-bill rates at the time, and gone ahead and retired.
Based on my current "draw" (to use a non-government term), I would need to live to 200 years of age to actually recover my deposits with interest.
What you "schmart guys" forget is that federal retirement is not inheritable. The payments end when the beneficiary dies. That tends to gobble up all that "unfunded pension liability". Actually, it doesn't just "tend" it actually does gobble it up.
Only in the private sector can you compute out a personal retirement program that assumes heirs will get a piece of the action. Rockefeller had such a program. Old Joe Kennedy had one. I'm sure most rich folks do. Salaried personnel usually don't except for their 401(k) plans or IRAs.
That's a bunch of leftist claptrap ~ they want you to cave in to higher taxes ~ that's the purpose of the article.
“Government spending including federal pensions will be substantially reduced directly or indirectly.”
By “indirectly,” I presume you mean through inflation. That may well happen. But I’m quite confident that existing federal pension formulas for current retirees will not be affected. For future retirees — possibly, as I noted.
I suggest that you look up my research on pension compensation (Michael Mannino published in the Journal of Pension Economics and Finance). I have computed pension compensation for a plan (Florida Retirement System) with lower benefits than the FERS plan. The average level of surplus deferred compensation was $250,000+ in the FRS plan with much higher levels for higher paid professionals and administrators. My calculations took into account non inheritable features of defined benefit plans. The private sector sells annuity plans that provide lifetime income without an inheritable feature.
In summary, you are wildly misinformed about government defined plans. I do not know the specifics of your situation. Unless you retired at normal retirement age (or later), you received substantial surplus deferred compensation.
“That’s a bunch of leftist claptrap ~ they want you to cave in to higher taxes ~ that’s the purpose of the article.”
The article unfortunately did not provide methodology background. However, I have confidence that the basic levels of unfunded liability are reasonable. More than likely, the levels of unfunded liability are understated. I agree that USA Today is left biased. The article did not advocate tax increases, however. I would not dismiss the levels of unfunded liabilities as a leftist trap. The mathematics are compelling and unfortunately irresitible.
Did you notice the other day that Treasury tapped into what can only be Postal employee retirement deposits so they could keep under the federal debt limit.
Your argument that the federales subsidies USPS is BS.
With respect to employee retirements they actually refer to ".......to pay benefits that won't be covered by future taxes....."
My retirement has been paid for in agency matching funds deposited with OPM (in US treasury bonds) which were paid by USERS OF THE MAILS, not TAXPAYERS. The actuaries say it works out.
What you do when you don't back USPS out of the action is you are dealing with the high priced spread in the US government. Your average postal employee simply doesn't earn the high incomes found commonly in, for example, Justice Department!
There are some exceptional postal workers ~ in management and technical positions ~ who earn essentially the same as their counterparts in other agencies, but their retirements are also paid out of user fees (postage) by private sector mailers in a process separate and distinct from TAXES.
That's why postal retirement funds can constitute a body of credit Geithner can use to avoid borrowing elsewhere. That's the subsidization of the federal government by USPS that's presently taking place.
I only see 5 occurrences of the word “tax” with 3 of those occurrences part of “taxpayers”. The article does not promote any particular solution to the budget problem.
The USPS has $80+ billion in unfunded pension liabilities. The unfunded liabilities are not covered by postal fees. The USPS has claim that it is not part of the government in an attempt to claim that these liabilities are part of general taxpayer obligations. The USPS is part of the government as Congress exerts considerable influence on its budgets and operations.
USPS employees are well compensated with almost iron clad job security (at least until now). The positions have the same bloated pay grades as other federal employees. The USPS has never ending battles between management and the labor cartels. As with any other labor cartel dominated organization, I am sure that the USPS has lots of lazy bums along with mind numbing and efficiency crashing work rules. I am sure there are talented and hard working individuals also.
Congress has given the USPS a politically charged mission with idiotic requirements for uniform postal rates and policital pressures to keep post offices open. Congress has also provided the USPS a monopoly on first class mail to offset the onerous constraints.
The Geittner manuevering involves phony government accounting. The USPS does not have any pension fund that I can find. Please give me a link to the CAFR for the USPS pension fund so I can see its investments. The federal government of which USPS is part of, has $80 billion of unfunded liabilities for postal workers. There are no assets to pay these benefits. The federal government has taxing ability and the USPS can raise postal rates.
With USPS overpaid into the retirement system to the tune of $78 billion................. give me a real source ~ on unfunded.
BTW, USPS cannot, by itself, raise rates. That matter is regulated by the Postal Regulatory Commission.
Here is a source about unfunded liabilities. Most likely, the liabilities are understated as government pension agencies use phony discount rates to understate liabilities.
The USPS is part of the federal government. The federal government does not have a pension portfolio to fund retirement benefits. The argument about overpayment is simply an issue of phony government accounting. Economically, the federal government has unfunded liabilities of $90+ billion for postal workers. These liabilities can only be met by reducing benefits, increasing taxes, or increasing postal rates.
“These liabilities can only be met by reducing benefits, increasing taxes, or increasing postal rates.”
You keep forgetting the other option: printing more money!
And it’s worth noting that the $90 billion figure, even if accurate, isn’t payable all at once — it’s spread out over many, many years.
"Comments: House Subcommittee Chairman Lynch introduced H.R. 5746 on July 15, 2010, which would require the Office of Personnel Management to recalculate the Postal Service's CSRS obligation using a methodology approved by the Postal Regulatory Commission and if it finds USPS has overfunded its obligation, then OPM would have 90 days to transfer this money to the Postal Service's Retiree Health Benefits Fund. The subcommittee passed the bill, but it was not enacted in the 111th Congress. On the Senate side, both Senators Carper and Collins introduced bills, S. 3831 and S.4000, in 2010 that would 1) modify OPM's methodology for calculating the Postal Service's CSRS and FERS pension liabilities and USPS's funding requirements for its retiree health benefits, 2)enhance efficiency and reduce costs, including leeway to close post offices and reduce workforce-related costs, 3) require an arbitrator to consider the Postal Service's financial condition in rendering decisions about collective bargaining agreements, and 4)allow the Postal Service to offer nonpostal products and services that are in the public interest. These bills were not enacted by the end of the 111th Congress. "
I thought something was funny with your GAO stuff ~ and there it is ~ the rest of the story.
GAO itself was the first to notice that the formula used to levy Postal Revenues into the retirement system was different than that used in the rest of the government.
The Postal Inspector General's office also found some serious multibillion dollar overpayments to OPM.
It's a very serious problem.
Frankly, for my purposes they can take the surplus and recalculate my retirement so I recover the full benefit of my earlier contributions.
The formula does not matter. The USPS is part of the federal government. There are no assets to pay for federal retiree benefits for postal retirees or any other federal retirees. The only options to pay for retirement benefits are taxes, fees, and printed money. Without substantial reductions in government spending including federal pensions, the dollar will collapse at some point. The world will not be able to absorb $100 trillion of new dollars. Essentially, this country is consuming far more than it is producing. The dollar’s collapse will bring widespread economic devastion wiping out savings and purchasing power. If governments (state and federal) still do not reduce spending, no one will accept dollars for transactions.
Sure there are assets. I have a couple of thousand acres on the Grand Canyon checked out and they’ll do just fine. BTW, the Constitution itself guarantees MY PENSION but it doesn’t protect national monuments, national parks, Obamakkkare or any of these other extraconstitutional gimcracks and geegaws.
You are certainly correct that the US government has many assets that could be sold. Many assets should be sold although I do not see that national parks will ever be sold. I do not know of any part of the Constitution or case law that guarantees federal pensions. New York state has a state constitution clause that supposedly guarantees pensions. Many other states have strong legal protections for government pensions.
These legal protections are essentially worthless if the dollar collapses. The collapse of the dollar will be facilitated by ridicuolous pension demands among other demands. Insistence by many groups including government employees for protection of their benefits will be a leading cause of the dollar collapse. This positive feedback loop (inflation will be the strong generator of positive feedback) will ensure the destruction of your pension (and large parts of the economy).
The statement about public debt is in Section 4 of the 14th Amendment. As far as i know, there is no case law on government pensions in regard to the 14th Amendment. The SC has not ruled favorably on government debt in past cases. According to your argument, the debt ceiling is a violation of the 14th Amendment. It is doubtful that anyone could successfully bring a debt ceiling case to the SC because the SC would not grant standing.
It does not matter if the SC would rule that government pensions are protected by the 14th Amemdment. The Constitution cannot ensure a viable level of economic activity to maintain prosperity. Governemnt spending policies threaten the economic viability of the country. You are deluded into thinking that government employees will be spared the devastion of economic ruin. You represent just another interest group trying to maintain its government spending bounty. You are part of the majority in line for government transfer payments.
BTW, there's no case law regarding that first sentence because you haven't looked into post Civil War Pensions.
One of the reasons military pensions continue to be UNFUNDED is very simple ~ with a Constitutional Obligation to pay them (14th Amendment) they don't need to be. The government would presumably have to sell assets to cover those pensions if it ran out of money.
Way back in WWII somebody (Congress I think) enticed men to join the military with the promise of a BONUS for service.
Payment was delayed. Eventually it was paid ~ but that was after the Veterans March on the Mall that had Eisenhower and McArthur being forced to clear the area with a display of military force.
As you no doubt recall the United States of America was created by a citizen army ~ they were paid little more than pocket change, cornbread and a promise of land patents for their heirs. The government made good with the land patents, and later on PENSIONS. I've read through all my ancestor's Revolutionary War pension applications. Most interesting!