Mailer groups applauded Postmaster General Jack Potter’s announcement that the USPS may be able to stave off a rate increase until 2006 if certain laws are changed.
Potter said the USPS had grossly miscalculated the amount of money it had to pay retiring employees. With a change in the law about how retirees are paid, the USPS could hold off increasing rates until 2006, Potter said before the USPS Board of Governors monthly meeting in Washington, D.C.
“This is like found money–like getting a late Halloween present,” said Neil Denton, executive director of the Alliance of Nonprofit Mailers. “This is as good as it gets.”
More importantly, this new found money will likely help the USPS reassert itself as a competitive medium for mailers to use.
“It’s like a company that’s going bankrupt suddenly getting a big tax cut,” said Gene Del Polito, president of Postcomm.
The Direct Marketing Association applauded Potter’s announcement but cautioned that Congress must change the laws that govern how the Postal Service funds its employees’ retirements. If the law is not changed, the USPS will likely file a new rate case with the Postal Rate Commission next spring that could lead to higher postage rates in 2004.
This development came after the U.S. Office of Personnel Management (OPM) reviewed the USPS’ pension liabilities and found the USPS’ formula contained overly conservative interest assumptions about the returns on the investments it made on its employees’ retirement funds. The President’s Office of Management and Budget (OMB) validated the OPM’s findings.
If the law is changed, postal costs could be reduced by $2.9 billion in fiscal year 2003 and another $2.6 billion in fiscal year 2004. Changes proposed by the USPS and supported by the Administration would have the USPS fully fund all of its future pension liabilities and correct its payment schedule for past liabilities.
The Postal Service maintained a deferred liability of $32 billion to pay for postal employees