US Postal Service 2003 Annual Report Download - page 53

2003 annual report united states postal service | 51
notes to the
financial statements
annual installments, which included interest computed
at a rate of 5% per year. We made the first payment at
the end of the year in which employees received their
pay increase.
The increase in our deferred liability for retirement
benefits under the CSRS as a result of basic pay
increases was $1,153 million in 2002 and $313
million in 2001.
Deferred Retirement Liability —
Retirees’ and Their Survivors’ Cost of Living
Adjustments (COLAs)
OPM determines the COLAs granted by Congress to
our retirees. Under the Omnibus Budget Reconciliation
Act of 1990, we were liable, by law, for our share of
the COLAs granted to those retirees, and their
survivors, retiring on or after July 1, 1971. We were
not responsible for any costs due to federal civilian
service before that date.
Prior to Public Law 108-18 (see Note 7) each year
OPM determined the current portion of the increase
in our share of the estimated liability of the CSRDF
and billed us for COLAs granted for the current year.
We expensed those billed amounts as they became
payable in 15 equal annual installments, which
included interest computed at a rate of 5% per year.
The increase in our deferred liability for our retirees’
COLAs was $1,329 million in 2002 and $1,668
million in 2001.
Deferred Retirement Costs
We have expensed all billed amounts for CSRS
through 2002. The amounts reported as a deferred
asset and a deferred liability on the balance sheet
for 2002 represented OPM’s calculation of the
amounts payable in the future.
Deferred retirement costs consisted of the following
(dollars in millions):
2002
CSRS $24,602
CSRS retirees' and survivors'
cost of living adjustments 7,629
Total $32,231
There are no deferred retirement costs associated
with FERS. For information on supplemental costs of
CSRS after April 2003 see Note 7.
Expense Components
The following table lists the components of our total
retirement expenses that are included in our
compensation and benefits expense and related
interest expense in the Statements of Operations for
2003, 2002 and 2001 (dollars in millions):
2003 2002 2001
CSRS $1,128 $ 740 $ 769
FERS 2,172 2,121 2,046
FERS — Thrift
Savings Plan 856 827 789
Dual CSRS 52 33 33
Social Security 1,544 1,511 1,498
Accrued Postal
Supplemental Liability 9--
Amortization of deferred cost:
CSRS -1,393 1,333
Annuitant COLAs -879 814
Interest expense
on deferred liabilities 116 1,601 1,603
Total retirement expense $5,877 $9,105 $8,885
Employer cash contributions to retirement plans were
$4,031 million in 2003, $6,013 million in 2002 and
$5,799 million in 2001. These amounts do not
include Social Security contributions and interest
expense on deferred retirement liabilities.
7The Postal Civil Service
Retirement System Funding
Reform Act of 2003 – Public
Law 108-18
On April 23, 2003, the President signed into law Postal
Civil Service Retirement System Funding Reform Act of
2003 – Public Law 108-18 (PL108-18), which
changed the way we fund our CSRS retirement plan.
Although the law changed the funding of the plan,
postal management determined that we are still a
participant in a multi-employer pension plan. The
parent-subsidiary relationship that we have as an
“independent establishment” of the executive branch of
the United States government allows for this accounting
treatment under FAS 87. As a “subsidiary” we cannot
direct the costs, benefits or funding requirements of the
federally-sponsored plan.
In November 2002, the Office of Personnel
Management (OPM) advised us that it had completed
a review of estimates and our then current scheduled
funding of the Civil Service Retirement and Disability
Fund (CSRDF). OPM determined that at our current