US Postal Service 2009 Annual Report Download - page 49

2009 Annual Report United States Postal Service | 47
COMPONENTS OF NET CHANGE IN
PLAN ASSETS
The following table prepared by OPM shows the compo-
nents of the net change in plan assets for the CSRS and
FERS programs.
Analysis of Change in Pension Net Assets as calculated by OPM
(9/30/08 latest actual data available)
(dollars in billions)
CSRS Actual 2008 2007
Net Assets as of October 1* $ 193.6 $ 207.9
+ Contributions 0.5 0.6
– Benefi t Disbursements (9.3) (8.9)
– Transfer to Health Benefi ts Fund — (17.1)
+ Investment Income 10.3 11.3
Net Assets as of September 30 $ 195.1 $ 193.8
FERS Actual 2008 2007
Net Assets as of October 1 $ 63.5 $ 58.0
+ Contributions 3.1 3.0
– Benefi t Disbursements (0.8) (0.7)
– Transfer to Health Benefi ts Fund — —
+ Investment Income 3.5 3.2
Net Assets as of September 30 $ 69.3 $ 63.5
Total CSRS and FERS Net Assets as
of September 30 $ 264.4 $ 257.3
*OPM restated September 30, 2007, CSRS net assets from $193.8 to $193.6.
As stated previously, CSRDF is a single fund and does not
maintain separate accounts for individual agencies. The
actual securities of the CSRDF are not allocated separate-
ly to CSRS or FERS, or to Postal and non-Postal benefi -
ciaries. The assets of the CSRDF are composed entirely of
special issue Treasury securities with maturities ranging up
to 15 years. The long-term securities bear interest rates
ranging from 3.25% to 7.00%, while the short-term securi-
ties bear interest rates ranging from 2.88% to 7.25%.
The assumed rates of return on the CSRS fund balance for
both 2008 and 2007 were 6.25% while the actual rates of
return were 5.45% and 5.63%, respectively. For the FERS
fund, the assumed rate of return for both 2008 and 2007
was 6.25%, while the actual rate of return was 5.42%
for both years. The projected rates of return on both the
CSRS and FERS fund balance for 2009 remain at 6.25%.
OPM estimates the contributions and benefi t payments for
the next fi ve years as follows:
Projection of CSRS and FERS Contributions and Benefi t Payments*
as calculated by OPM
(dollars in billions)
CSRS FERS
Contributions Total Benefi t Payments Contributions Total Benefi t Payments
2009 $ 0.5 $ 10.0 $ 3.4 $ 0.9
2010 0.5 10.7 3.7 1.1
2011 0.4 11.4 4.0 1.3
2012 0.4 12.0 4.4 1.5
2013 0.3 12.7 4.7 1.8
*Assumes total employee population remains constant.
HEALTH BENEFITS
Postal employees and retirees may participate in the Fed-
eral Employees Health Benefi t Program (FEHBP), which
is administered by OPM. We account for our employee
and retiree health benefi t costs as an expense in the pe-
riod our contribution is due and payable to FEHBP. For
retiree health benefi ts we use multiemployer plan account-
ing rules in accordance with ASC 715 (formerly FAS 106,
Employers’ Accounting for Postretirement Benefi ts Other
Than Pensions).
The drivers of our active employee health care costs are the
number of employees electing coverage and the premium
costs of the plans they select. On average, the employees
of the Postal Service paid for 19% of the premium cost in
2009 and we paid the remainder. The employee percent
contribution was 18% in 2008 and 17% in 2007. Premiums
for each plan participating in FEHBP are determined annu-
ally by OPM. In September 2009, OPM announced aver-
age premium increases of 8.8% for calendar year 2010.
Previous increases were 7% in January 2009, 2% in 2008
and 1.8% in 2007. The low premium increases in 2007 and
2008 were the result of lower plan costs and the applica-
tion of plan reserves to constrain premium increases.
Despite an average increase of 7% in FEHBP premiums
for 2009, employee migration to lower cost plans and a
declining workforce combined to lower total health benefi t
costs. In 2009, health benefi t expenses were $5,294 mil-
lion, which were 7.4% of total operating expenses and a
decrease of $82 million from 2008. The 2008 expense of
$5,376 million was 6.9% of our total operating expenses
and a decrease of $25 million from 2007.