US Postal Service 2011 Annual Report Download - page 29

2011 Report on Form 10-K United States Postal Service - 27 -
COMPONENTS OF NET CHANGE IN PLAN ASSETS
The following table prepared by OPM shows the
components of the net change in plan assets for the
CSRS and FERS programs.
Analysis of Change in Pension Net Assets as calculated by OPM
(9/30/10 latest actual data available)
(Dollars in billions)
Actual Actual
CSRS
2010
2009
Net Assets as of October 1*
$
195.3
*
$
195.0
+ Contributions
0.4
0.5
- Benefit Disbursements
(10.7)
(10.1)
9.6
9.9
Net Assets as of September 30
$
194.6
$
195.3
*OPM restated September 30, 2009 CSRS net assets from $195.329 to $195.293
Actual Actual
FERS
2010
2009
Net Assets as of October 1
$
75.2
$
69.3
+ Contributions
3.1
3.2
- Benefit Disbursements
(1.1)
(1.0)
+ Investment Income
3.6
3.7
Net Assets as of September 30
$
80.8
$
75.2
CSRS and FERS Net Assets
at September 30
$ 275.4 $ 270.5
+ Investment Income
As noted previously, CSRDF is a single fund and does not
maintain separate accounts for individual employer
agencies. The actual securities of the CSRDF are not
allocated separately to CSRS or FERS, or to postal and
non-postal beneficiaries. The assets of the CSRDF are
composed entirely of special-issue Treasury securities
with maturities of up to 15 years. The long-term securities
bear interest rates ranging from 2.50% to 6.875%, while
the short-term securities bear interest rates of 1.875%.
The assumed rates of return on the CSRS fund balance
for 2010 and 2009 were 5.75% and 6.25% respectively,
and the actual rates of return were 5.10% and 5.23%,
respectively. For the FERS fund, the assumed rates of
return for 2010 and 2009 were 5.75% and 6.25%
respectively, while the actual rates of return were 4.77%
for 2010 and 5.18% for 2009. The projected rate of return
on the CSRS and FERS fund balance for 2011 is 5.75%.
OPM estimates the contributions and benefit payments for
the next five years as follows:
HEALTH BENEFITS
Postal employees and retirees may participate in the
Federal Employees’ Health Benefit Program (FEHBP),
which is administered by OPM. The Postal Service
accounts for current employee and retiree health benefit
costs as an expense in the period the contribution is due.
For retiree health benefits, multiemployer plan accounting
rules are used.
The drivers of active employee healthcare expense are
the number of employees electing coverage and the
premium costs of the selected plans. On average, the
Postal Service paid 79% of the premium cost in 2011 and
employees paid the remainder. The average employer
contribution was 80% in 2010 and 81% in 2009. We
expect the Postal Service contribution to health benefit
premiums to continue to decrease in the future, until they
reach the average for the remainder of the federal
government. The total premium cost for each plan is
determined annually by OPM. In September 2011, OPM
announced average premium increases of 3.8% for
calendar year 2012. Previous increases were 7.2% in
2011, 8.8% in 2010, and 7.0% in 2009.
Total health benefit expenses were $5,222 million, an
increase of $81 million, or 1.6%, in 2011 compared to
2010. The 2011 average premium increase of 7.2% drove
the increase in health benefit expense which was partially
offset by a lower number of employees in 2011 compared
to 2010. The 2010 expense of $5,141 million was a
decrease of $153 million, or 2.9%, from the 2009 health
benefits expense of $5,294 million. Employee health
benefits expense was 7.4%, 6.8%, and 7.4% of total
operating expenses in 2011, 2010, and 2009,
respectively.
RETIREE HEALTH BENEFITS
Eligible employees, those with at least five consecutive
years of participation in the FEHBP immediately
preceding retirement, are entitled to continue to
participate in FEHBP after retirement. The amount due
Projection of CSRS and FERS Contributions and Benefit Payments*
as calculated by OPM
(Dollars in billions)
2011 $ 0.3 $ 12.2 $ 3.2 $ 1.3
2012 0.3 12.5 3.1 1.5
2013 0.2 12.8 3.1 1.7
2014 0.2 13.1 3.0 1.9
2015 0.2 13.3 3.0 2.2
* Assumes total employee population remains constant.
CSRS FERS
Total Benefit Total Benefit
Contributions Payments Contributions Payments