The Home Of The Bruce Collins Show

Friday, July 24, 2009

The US Postal Service- Going Bankrupt?

The postal unions are raising red flags, and using the "D" (default) word to bring attention to a gap in the forward funding of their retirement benefits which they see coming in the autumn.

Most federal agencies pay their retirement costs as they are incurred. The Postal Service pre-funds their projected retirement benefit costs a few years in advance.

The issue here with the unions is a bit bigger than just the September preparyment. The Postal Service has funds set aside for future retirement costs in a way that is similar to Social Security. Indeed, one might think of this system as their version of Social Security.

There is about $32 billion set aside (on paper) for their needs. The unions would like the postal service to get access to that money now. Think of it as taking the Social Security Trust Fund out of the Treasury and making it available for management by some private entity now.

What's the issue? Since the system has been in place for so long, and only now is such a fuss being raised, there is an obvious fear on the part of the Postal Employees of a government default and a devaluation of their pension fund, along with Social Security.

Twitter Updates

    follow me on Twitter