US Postal Service 2015 Annual Report Download - page 23

2015 Report on Form 10-K United States Postal Service 21
The contract with the APWU became effective May 23, 2011 and extended through May 20, 2015. The contract included a
wage freeze for the first two years, with general wage increases over the life of the contract, totaling 3.5%. The agreement
also established a new career pay schedule that on average is 10.2% lower than the previous pay schedule.
Non-bargaining unit employee salary rates were frozen in 2013. Most non-bargaining employees received a 1.0% pay increase
in calendar year 2014, but did not receive COLAs or locality pay.
Separation Incentives
We have periodically offered targeted separation incentives to employees who agreed to retire or resign within a specified
time period. These separation incentives encourage attrition and help us to reduce our career complement to better match
workload and reduce costs. These incentives have been targeted to postmasters, clerks, mail handlers and administrative
employees, and are utilized only when work has been eliminated.
No separation incentives were offered during the year ended September 30, 2015. The table below details the impact of
incentives which have been accepted by class of employees in the years ended September 30, 2014, and 2013:
Year Initiated Impacted Employee Class Monetary Incentive Employees Accepted Charge Recorded
2014 Postmasters $ 10,000 (a) 1,380 $ 15 million
2013 APWU employees $ 15,000 (b) 22,842 $ 351 million
(a) Payment was made December 5, 2014.
(b) A payment of $5,000 per employee was made on May 23, 2013 and $10,000 per employee was paid on May 23, 2014.
Retirement Expense
The majority of our employees participate in either CSRS or FERS based on the starting date of employment with us or other
U.S. government employer. Employees may also participate in the Thrift Savings Plan (“TSP”), a defined contribution savings
and investment plan administered by the Federal Retirement Thrift Investment Board. For additional information, see Item 8.
Financial Statements and Supplementary Data, Notes to Financial Statements, Note 9 - Retirement Plans.
We record our contributions to the plans as an expense in the period during which the contribution is due. The expense is
reported within Compensation and benefits under Operating expenses in the accompanying Statements of Operations. We
recognize expense for the legally required contribution for each period and record a liability for any contributions due and
unpaid at the end of each reporting period. The following table details the components of total retirement expense for the
years ended September 30, 2015, 2014 and 2013:
(in millions) 2015 2014 2013
FERS $ 3,499 $ 2,888 $ 2,891
Social security 1,956 1,881 1,860
TSP 1,025 989 987
Total retirement expense $ 6,480 $ 5,758 $ 5,738
Retirement expense increased 12.5% in 2015 primarily due to the increase in our employer contribution rate from 11.9% to
13.2% of basic pay for most employees who participated in FERS during 2015. This rate increase became effective October
1, 2014, and increased our annual retirement expense by approximately $500 million for the year ended September 30, 2015.
The OPM announced that employer contributions for FERS as a percentage of employee basic pay will increase to 13.7% in
2016.