USPS to stop paying into employee pension fund

[TrueBlueTerrier]

U.S. Postal Service to stop paying into employee pension fund http://www.washingtonpost.com/business/ ... story.html" onclick="window.open(this.href);return false;

June 22 (Bloomberg) -- The U.S. Postal Service, facing insolvency unless it gets approval to delay a $5.5 billion payment for worker health benefits, will suspend contributions to an employee retirement account to save $800 million this year.

The Postal Service will stop paying employer contributions to the defined-benefit Federal Employees Retirement System, which covers about 85 percent of career postal workers, it said today in an e-mailed statement. The $115 million payment, made every other week, will stop on June 24, the statement said.

Suspending payments to the retirement account will help “conserve cash and preserve liquidity,” the statement said. The agency estimates it has overpaid the retirement account by $6.9 billion and has asked Congress to pass legislation to return that money.

The suspension will save the Postal Service $800 million through the end of its fiscal year, it said. The agency said it still needs Congress to enact laws that would help cut costs and restore financial stability.

Even with the cuts, the service wants the authority to end Saturday delivery and reduce pre-payment of health benefits for retirees. It has said it will not be able to make a $5.5 billion payment due Sept. 30 for health benefits for future retirees.

The Postal Service reported a loss of $8.5 billion in its 2010 fiscal year. It also reported a widening second-quarter loss, to $2.6 billion, on declining volumes of first-class mail.

The service will continue to transmit employee contributions to the pension fund and will make payments to the Thrift Savings Plan, a defined contribution federal retirement plan, Chief Human Resources Officer Anthony Vegliante said in the statement.