US Postal Service 2011 Annual Report Download - page 82

2011 Report on Form 10-K United States Postal Service - 80 -
PSRHBF Commitment P.L. 109-435
(Dollars in millions) Requirement
2012 11,100
2013 5,600
2014 5,700
2015 5,700
2016 5,800
Total PSRHBF Commitment $ 33,900
These annual prefunding payments are in addition to the
regularly allocated cost of premiums for current retirees,
which continue to be payable through 2016. The law
requires that, not later than 2017, OPM will perform an
actuarial valuation to determine if additional payments into
the PSRHBF are required. If required, OPM will design an
amortization schedule to fully fund any remaining liability
by 2056. Starting in 2017, the Postal Service’s share of
the health insurance premiums for current and future
Postal Service retirees will be paid from the PSRHBF.
Beginning in 2017, the Postal Service will also fund the
actuarially determined normal cost. The Postal Service
did not make any prefunding payments in 2011, but paid
$5.5 billion and $1.4 billion into the fund in 2010 and
2009, respectively. At September 30, 2011, the balance in
the fund was $44.1 billion.
Total retiree health benefits expenses were $2,441 million
in 2011, $7,747 million in 2010 and $3,390 million in
2009. Components of retiree health benefits expense for
the three years ended September 30, 2011, are as
follows:
Retiree Health Benefits
(Dollars in millions)
Retiree Health Benefits Premiums $ 2,441 $ 2,247 $ 1,990
P.L. 109-435 Payment to PSRHBF - 5,500 1,400
Total Retiree Health Benefits
$
2,441
$
7,747
$
3,390
2011
2010
2009
Because the amounts to be paid into the PSRHBF are set
by legislation, our retiree health expense may not
represent the full cost of the benefits earned by USPS
employees. These costs are reflected as “Retiree health
benefits” in the Statements of Operations.
NOTE 8 — RETIREMENT PROGRAMS
PENSION PROGRAMS
Employees participate in one of three pension programs
based on the starting date of employment with the federal
government. Employee and employer contributions are
made to the Civil Service Retirement System (CSRS), the
Dual Civil Service Retirement System/Social Security
(Dual CSRS), or the Federal Employees Retirement
System (FERS), all of which are administered by the
OPM. Employees may also participate in the Thrift
Savings Plan (TSP), a defined contribution retirement
savings and investment plan, administered by the Federal
Retirement Thrift Investment Board.
CSRS
Officers and career employees hired prior to January 1,
1984, are covered by the CSRS, which provides a basic
annuity toward which the Postal Service and the
employee contribute at rates prescribed by law. Effective
October 2006, P.L. 109-435 suspends the employer
obligation to make contributions for CSRS employees’
retirement until 2017. At that time, OPM will perform an
actuarial valuation to determine whether additional
payments are necessary. The Postal Service does not
match TSP contributions for employees participating in
CSRS.
Dual CSRS
Employees with prior U.S. Government service who were
rehired between January 1, 1984, and January 1, 1987,
are covered by Dual CSRS, which consists of a basic
annuity and Social Security. The Postal Service and the
employee contribute to Social Security and the basic
annuity at rates prescribed by law. The Postal Service
does not match TSP contributions for employees
participating in Dual CSRS.
FERS
Effective January 1, 1987, officers and career employees
hired since December 31, 1983, are covered by the
Federal Employees Retirement System Act of 1986,
except for those covered by Dual CSRS. Also included
are employees formerly covered by CSRS who elected in
either 1987, 1988, or 1998 to participate in FERS.
FERS consists of Social Security, a basic annuity plan,
and TSP. The Postal Service and the employee contribute
to Social Security and the basic annuity plan at the rates
prescribed by law. The Postal Service is required to
contribute to TSP a minimum of 1% per year of the basic
pay of employees covered by this system. It is also
required to match a voluntary employee contribution up to
3% of the employee’s basic pay, and 50% of an
employee’s contribution of between 3% and 5% of basic
pay.
EMPLOYEE / EMPLOYER CONTRIBUTIONS
During fiscal years 2009 and 2010, employer
contributions, as a percentage of employee basic pay
were 11.2% for FERS and zero for CSRS and Dual
CSRS. During fiscal year 2011, employer contributions,
as a percentage of employee basic pay were 11.7% for
FERS and zero for CSRS and Dual CSRS. Beginning on
June 24, 2011 the Postal Service suspended payment of
the employer contribution to FERS. It continued to accrue