US Postal Service 2012 Annual Report Download - page 97

2012 Report on Form 10-K United States Postal Service- 96 -
NOTE 8 —RETIREMENT BENEFIT PLANS
PENSION PROGRAMS
Employees participate in one of three federal government pension programs based on the starting date of
their 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.
As government-sponsored benefit plans, the CSRS, Dual CSRS and FERS are not subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended. 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
The CSRS was established by the Civil Service Retirement Act, which was enacted on May 22, 1920. It is
a stand-alone retirement plan intended to provide reasonable benefits for long-service Federal employees.
The CSRS, which is closed to new participants, covers most Federal employees who first entered a
covered position prior to January 1, 1984. CSRS 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
Postal Service 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
Dual CSRS is a subset of the CSRS plan. 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 by law to contribute to TSP a minimum of 1% per year of the basic pay of employees covered by
this system. It is also required by law 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.
As discussed above, the pension plans generally provide for retirement, death and/or termination benefits
for eligible employees, based on specific eligibility/participation requirements, vesting periods and benefit
formulas. The Postal Service is required to provide funding for these plans as determined by the
administrator, the Office of Personnel Management (OPM). Annual funding requirements can fluctuate
significantly if changes are made by the passage of a new federal law or, in some circumstances, by OPM
under its authority as administrator. The Postal Service cannot direct the costs, benefits, or funding
requirements of the plans. Accordingly, the Postal Service’s participation in the federal retirement plans is
accounted for using multiemployer plan accounting rules.
Effective September 30, 2012, the Postal Service adopted new disclosure requirements for multiemployer
benefit plans as outlined in Accounting Standards Update (ASU) No. 2011-09, Compensation-Retirement
Benefits-Multiemployer Plans (Accounting Standards Codification 715-80). The new guidance requires
additional quantitative and qualitative disclosures for employers who participate in multiemployer pension
plans and multiemployer other postretirement benefit plans. The disclosure requirements have been applied
retrospectively to all years and are presented below.