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How is my post wrong? From my post: (Certain grandfathered companies in the private sector are also allowed to escape ERISA, and this will be a problem if any of them go out of business.)

You are simply incorrect that the USPS needs to pay for an employee's pension on day one. They contribute according to a vesting schedule, same as any private sector company not grandfathered.

It's only in their projections that they must include full costs. Unlike many other agencies, the USPS can't tell Congress that a program will cost $X over the next 10 years, where $X excludes the cost of employee pensions.




You are wrong because the USPS is required to fully pre-fund all of its pension obligations. It does not pre-fund based on a vesting schedule, it must prefund each obligation all at once. That is why the prefunding obligation is always brought up when discussing the USPS's finances--it is a unique requirement that is not shared by any other entity, public or private.

You are probably misunderstanding the pre-funding schedule. Beginning in 2006, the USPS was obligated to make pre-funding payments with the goal of fully pre-funding 75 years worth of pensions by 2017. See the linked WaPo article, which explicitly states "Congress passed a statute in 2006 requiring the early payment of 75 years worth of retiree benefits within 10 years. " (This is not the same as vesting, because the pre-funding obligation is not tied to the vesting of any particular group of beneficiaries' benefits.)

More specifically, see section 801, et. al., for the specific language of the Postal Accountability and Enhancement Act fo 2006 which creates the silly requirement.


I don't care what some innumerate reporter at the WaPo wrote.

According to the actual law, what must be fully funded is the "actuarial present value of all future benefits payable from the Fund." What this means is that if an employee's pension has 50% vested, their "future benefits payable from the Fund" are 50% of their pension. The USPS is then obligated to put 50% of the NPV of their pension into the fund by 2017.

https://www.govtrack.us/congress/bills/109/hr6407/text

It's explicitly stated 5 times it should comport with "generally accepted actuarial practices and principles", which rules out all the insanity people seem to be attributing to this law.


Yes, I know what the text of the bill states, which is why I referenced it in earlier comments. More importantly, you yourself have posted the relevant language. The "acturial present value" part of the quoted phrase is what must comport with generally accepted actuarial practices. The problem is that "all future benefits payable" is by its express language not limited to vested benefits. You need to read the entire code section, not just little snippets.


I'm very much enjoying this discussion and I hope you guys can find a definitive statement about what the bill entails. (I find the language you have both quoted from the bill to be too vague to my uncertified ear to make a decision.)

Is your claim that the postal service must pre-fund unvested benefits at the day the employee is hired? That is, is that how you think "future benefits payable" is being interpretted? Because what's definitely not true is that the postal service is being required to fund un-hired (or unborn) employees. See this article, which has quotes from the Congressional Research Service.

http://www.cnbc.com/id/45018432


Plans may be underfunded if fully funding the plan represents a major threat to the business. The net effect of which is plans can easily become significantly underfunded without being grandfathered in.

(c) Variance from minimum funding standards (1) Waiver in case of business hardship (A) In general If— (i) an employer is (or in the case of a multiemployer plan, 10 percent or more of the number of employers contributing to or under the plan are) unable to satisfy the minimum funding standard for a plan year without temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan), and (ii) application of the standard would be adverse to the interests of plan participants in the aggregate, the Secretary of the Treasury may, subject to subparagraph (C), waive the requirements of subsection (a) for such year with respect to all or any portion of the minimum funding standard. The Secretary of the Treasury shall not waive the minimum funding standard with respect to a plan for more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan) consecutive plan years.




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