The Government Accountability Office has undertaken a review of the U.S. Postal Service's retirement-funding responsibilities after the organization and employees argued the requirement that the USPS pre-pay into its retirement fund was the main reason the service was facing financial ruin.
The report found even though the retirement payments are placing a huge burden on the Postal Service, it should stay the course and keep paying into the retirement accounts.
Alternative measures, such as a pay-as-you-go approach to funding retirement accounts, have been proposed, but the GAO found these were all unsustainable options. These ideas would all increase the USPS’ unfunded liability and would force the organization to pay more later.
According to the USPS, retirement account funding represents $32 billion of its $41 billion in losses over the past six years. The company has even defaulted on the last two years of retirement fund payments, totaling $11.1 billion.
“USPS should prefund its retiree health benefit liabilities to the maximum extent that its finances permit, but none of the funding approaches may be viable unless USPS has the ability to make the payments,” according to the report. “USPS's default on its last two required … payments and its inability to borrow further make the need for a comprehensive package of actions to achieve sustainable financial viability even more urgent.”
By fiscal year 2017, the Post Office will be required to pay $33.9 billion on top of the $11.1 billion it already owes. The USPS is currently trying to save $1.2 billion by closing more than 200 retail outlets across the country. - Jon Ross