US Postal Service 2014 Annual Report Download - page 63

2014 Report on Form 10-K United States Postal Service 59
Employee / Employer Contributions
As required by law, the Postal Service contribution rate was 11.9% of base salary for current FERS employees for the twelve
months ended September 30, 2014, 2013 and 2012. For employees covered by the FERS system, the Postal Service is also
required to contribute to the TSP a minimum of 1% per year of the employee’s basic pay and to match voluntary employee’s
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.
P.L. 109-435 suspends employer contributions to the CSRS that would otherwise have been required under Title 5, Section
8334(a)(1) of the United States Code, until 2017. At that time the OPM will determine whether additional funding is required
for the benefit of Postal Service retirees. As a result, the Postal Service made no contributions to the CSRS and Dual CSRS in
2014, 2013 and 2012.
The Postal Service recognizes expense for the legally required contribution for each period and records a liability for any
contributions due and unpaid at the end of a reporting period.
Expense Components
The following table summarizes the components of total retirement expenses included in “Compensation and benefits” expense
in the Statements of Operations for the years ended September 30, 2014, 2013 and 2012:
(in millions)
2014
2013
2012
FERS
$
2,888
$
2,891
$
2,980
Social security
1,881
1,860
1,853
TSP
989
987
1,021
Total retirement expense
$
5,758
$
5,738
$
5,854
The following table summarizes the number of employees enrolled in each of the retirement plans at the end of September 30,
2014, 2013 and 2012:
(actual numbers)
2014
2013
2012
CSRS
43,887
50,932
67,224
Dual CSRS
2,877
3,232
3,942
FERS
441,546
436,891
457,292
Total enrollment
488,310
491,055
528,458
Employer cash contributions to retirement plans were $3.9 billion in 2014, $3.9 billion in 2013 and $4.0 billion in 2012. These
amounts do not include Social Security contributions. The OPM announced that employer contributions as a percentage of
employees basic pay for FERS will increase to 13.2% in 2015.
Employee contributions for the past three years, as a percentage of employee basic pay, were 7.0% for CSRS and 0.8% for most
Dual CSRS and FERS. New hires participate in FERS with higher contribution rates than employees with greater tenure due to
changes made effective for employees hired on or after January 1, 2013.
The OPM’s most recent calculation estimates a FERS deficit of $0.1 billion at September 30, 2013, the latest actual data
available. They had previously estimated that the Postal Service had overfunded its FERS obligations by approximately $0.9
billion at September 30, 2012. This change from a surplus to a deficit resulted primarily from changes to government-wide
economic and demographic assumptions made by the OPM. As a result, OPM has calculated an amortization schedule to pay
down the deficit over 30 years and, accordingly, billed the Postal Service $6.7 million. This amount has been included in
“Payables and accrued expenses” in the September 30, 2014 Balance Sheets. The OPM currently estimates that the FERS
deficit will increase to approximately $0.6 billion by September 30, 2014. The Postal Service is requesting that the OPM
calculate FERS liabilities utilizing Postal Service-specific assumptions.