No Employee Impact from Missed RHB Prefunding Payments

The Postal Service’s decision not to make two payments to fund retiree health benefits — due August 1 and September 30 — will have no impact on employee pay or operations.

In a prepared statement, USPS said it will “continue to deliver the mail, pay our employees and suppliers and meet our other financial obligations.”

The $5.5 billion payment due August 1 and the $5.6 billion payment due September 30 are required by the Postal Accountability and Enhancement Act, which became law in 2006.

The statement also said the Postal Service is moving ahead with implementation of its strategic plan, adding “comprehensive postal legislation is needed in order to return the Postal Service to long-term financial stability.” USPS says it “remains hopeful” a new law will be enacted during the current Congress.

Background

Under the Postal Accountability and Enhancement Act of 2006, the Postal Service is required to prefund Retiree Health Benefits. The Act established an accelerated prefunding schedule for FYs 2007 through 2016. The Postal Service has made $17.9 billion of these payments so far, reflecting the required payments for FYs 2007-2010. A law was passed last year that deferred the FY 2011 $5.6 billion prepayment until Aug. 1, 2012. As a result, the total required to prefund Retiree Health Benefits in 2012 is $11.1 billion: the FY 2011 payment of $5.5 billion due by Aug. 1, 2012, and the FY 2012 payment of $5.6 billion due by Sept. 30, 2012. Absent legislative action, the Postal Service will not make either payment in order to fully fund its operations.