Tuesday, September 14, 2010

How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways

At a time when the U.S. Postal Service should be trying to downsize by getting employees to retire early, it instead continues finding ways to discourage early retirements.

In recent pension estimates for employees considering early retirement, USPS has been leaving out information about a significant benefit, writes Don Cheney in a PostalReporter editorial called Does the Postal Service Really Want Early Retirements?

“The Postal Service issued FERS [Federal Employees Retirement System] annuity estimates that omitted the employee’s FERS annuity supplement” even though the supplement “is often nearly equal the basic annuity amount,” he says. Cheney is an APWU leader in Auburn, WA who has worked extensively on and written about early-retirement problems at the Postal Service for seven years.

“Most postal employees in FERS are eligible for the annuity supplement after age 55 with 30 years of service, but in a VERA [voluntary early retirement], RIF [reduction in force], or involuntary transfer over 50 miles that requirement is reduced to 20 years – a significant bonus.” Calculating the supplement isn’t rocket science; there’s a Web site that does it for free.

Poor communication and actual miscommunication from the Postal Service were major reasons that employee response was so low to some special early-retirement offers last year. The National Association of Letter Carriers filed a grievance (which is still active) last year because USPS failed to provide mandatory retirement counseling prior to the deadline for accepting one of the offers.

A commenter wrote on this site last month that long delays between retirement date and receipt of full retirement pay are also causing postal employees to delay retirement. "I can calculate my retirement in 30 minutes on my calculator, so why does it take 7 months for the USPS to do it?"

Cheney wonders whether the Postal Service is purposely discouraging early retirements “so they can justify weakening the no-layoff clause in upcoming contract negotiations.”

For an organization that admits to having too many employees and whose strategic plan says it will shrink the workforce through attrition, the Postal Service’s actions – and inactions – on early retirement do look fishy. Is it trying to exacerbate its financial problems in the short term so that it can win some kind of longer-term relief, such as reform of retiree healthcare payments or an end to Saturday delivery?

Or is it just plain old incompetence and bureaucratic indifference? In any case, how can postal executives claim they need exigent rate increases when they clearly have not done everything they can to reduce the Postal Service’s cost structure via early retirements?

For other articles on early-retirement issues at the Postal Service, please see:

18 comments:

Anonymous said...

There are many errors in this editorial, I'll mention a few of the highlights.

1.) The Office of Personnel Management (OPM) is responsible for annuity estimates and payments, NOT the USPS. Once any federal employee, including the USPS, states his/her intention to retire, an estimate of the annuity is calculated by OPM. OPM does all retirement paper work, as well as issuing monthly retirement payments. OPM was swamped with USPS retirees last year, and fell behind in clearing paperwork. That is not a USPS problem, that is a federal government problem. Don't form paranoid theories of the USPS intent based on some other agencies problems.

2.) The web page you reference concerning calculating FERS annuity supplement has no information. (Did you even click the link?) The information on other subjects is limited to about 60 words. You're suggesting that I base my retirement decision on a web page based on an anonymous AOL account? You can't be serious.

3.) The APWU and the NALC will file a 1,000 grievances in the hopes of hitting the jackpot. It's like the Publisher's Clearinghouse Sweepstakes, send in your entry, and you might win $10 million. This grievance has absolutely no merit, nothing will come of it.

4.) The single biggest issue facing the USPS is Congressional interference. The USPS has too many plants. There are roughly 350 processing plants, and the USPS could function well with about 250, and be much more efficient. But try to close one, and every politician from the mayor to your Senator starts bleating about how we can't do without it. Every entity yells "get more efficient", but then bitterly complains when the USPS takes steps to do so. Perhaps those who have never run a business, like most politicians, do not understand that when your product (mail) is going down every year, efficiency is gained by closing buildings and getting rid of employees. The USPS knows that they have too many plants, too many small post offices that can't break even. But try to close Podunk, Iowa, and you'll find a Senator writing a federal law that forbids closing it.

Here's the very simple 2 year plan to get the USPS back on their feet. Nothing hard about this, other than all the whining.

1) Close 100 plants outgoing operations located within 70 miles of another plant. $500 million a year

2) Close 2,000 small post offices located within 10 miles of another. $250 million

3) Saturday home delivery has to go. Complaints talk about prescription drugs or local newspapers. The costs far outweigh the revenue. The drugs could be handled many different ways. $4 billion

4) Change First Class Mail service standards from 1,2,3 day service to 2,3,4. Overnight service to towns over 180 miles away, for 44 cents?? That's silly. Try that with Fedex or UPS.

The cost to the USPS to provide overnight service for FCM is hidden. In simple terms, it limits the use of most originating automated equipment to 4-6 hours of processing time a day. It causes a plant to run outgoing mail on many machines, causing thousands of extra trays, and then paying to handle and transport those trays, instead of consolidating to 1-2 machines and 1 tray.

Slipping service by a day would open outgoing processing windows to 12 - 16 hours a day, instead of the 4-6 now. An AFCS canceling machine could run from 9AM - 5PM the next day, instead of 5PM - 9PM tonight. This would vastly reduce the number of trays in the system, saving handling and transportation costs. It would move thousands of employees from the night shift to the day shift, saving 9% pay differential, not too mention it would be a nice benefit for many employees.

This is a huge unmeasured savings not ever seriously discussed. Potential savings $5 billion

There, I fixed the USPS.

Anonymous said...

There are many errors in this editorial, I'll mention a few of the highlights.

1.) The Office of Personnel Management (OPM) is responsible for annuity estimates and payments, NOT the USPS. Once any federal employee, including the USPS, states his/her intention to retire, an estimate of the annuity is calculated by OPM. OPM does all retirement paper work, as well as issuing monthly retirement payments. OPM was swamped with USPS retirees last year, and fell behind in clearing paperwork. That is not a USPS problem, that is a federal government problem. Don't form paranoid theories of the USPS intent based on some other agencies problems.

2.) The web page you reference concerning calculating FERS annuity supplement has no information. (Did you even click the link?) The information on other subjects is limited to about 60 words. You're suggesting that I base my retirement decision on a web page based on an anonymous AOL account? You can't be serious.

3.) The APWU and the NALC will file a 1,000 grievances in the hopes of hitting the jackpot. It's like the Publisher's Clearinghouse Sweepstakes, send in your entry, and you might win $10 million. This grievance has absolutely no merit, nothing will come of it.

4.) The single biggest issue facing the USPS is Congressional interference. The USPS has too many plants. There are roughly 350 processing plants, and the USPS could function well with about 250, and be much more efficient. But try to close one, and every politician from the mayor to your Senator starts bleating about how we can't do without it. Every entity yells "get more efficient", but then bitterly complains when the USPS takes steps to do so. Perhaps those who have never run a business, like most politicians, do not understand that when your product (mail) is going down every year, efficiency is gained by closing buildings and getting rid of employees. The USPS knows that they have too many plants, too many small post offices that can't break even. But try to close Podunk, Iowa, and you'll find a Senator writing a federal law that forbids closing it.

Here's the very simple 2 year plan to get the USPS back on their feet. Nothing hard about this, other than all the whining.

1) Close 100 plants outgoing operations located within 70 miles of another plant. $500 million a year

2) Close 2,000 small post offices located within 10 miles of another. $250 million

3) Saturday home delivery has to go. Complaints talk about prescription drugs or local newspapers. The costs far outweigh the revenue. The drugs could be handled many different ways. $4 billion

4) Change First Class Mail service standards from 1,2,3 day service to 2,3,4. Overnight service to towns over 180 miles away, for 44 cents?? That's silly. Try that with Fedex or UPS.

The cost to the USPS to provide overnight service for FCM is hidden. In simple terms, it limits the use of most originating automated equipment to 4-6 hours of processing time a day. It causes a plant to run outgoing mail on many machines, causing thousands of extra trays, and then paying to handle and transport those trays, instead of consolidating to 1-2 machines and 1 tray.

Slipping service by a day would open outgoing processing windows to 12 - 16 hours a day, instead of the 4-6 now. An AFCS canceling machine could run from 9AM - 5PM the next day, instead of 5PM - 9PM tonight. This would vastly reduce the number of trays in the system, saving handling and transportation costs. It would move thousands of employees from the night shift to days, saving 9% night pay, as well as a positive for employees.

This is a huge unmeasured savings not ever seriously discussed. Potential savings $5 billion

There, I fixed the USPS.

Anonymous said...

I didn't know about the FERS supplement until a few days ago. Had I known last year, I would have taken the early out with incentive or without. I've had enough.

Anonymous said...

article is wrong big surprise..the supplement isn't available until you reach mra period..yes under early out you can retire at 50 with 25 years but you won't receive the supplement until you are 56

Anonymous said...

11:36- The article isn't wrong. There is a class action grievance stating that because of this reduction in force, the supplement should have the age requirement waved. Hence, the retiree would receive the supplement BEFORE age 56 until they reach the age to qualify for social security.

Anonymous said...

I'm trying to find out. Are there currently any "Sweeteners" for retiring early? My dad is 60 and has 28 years of service (including some purchased military time). He was going to wait until 62, but I had heard rumors months ago about adding 3 years to your service and 3 to your age. Is there anything like that going on? Or is the only thing the annuity supplement? Thx!

Anonymous said...

I have 28 years, and realize how haphazard the usps Personnel is.
They lose all your records numerous times, OPM does nothing even after being reported.
They have other peoples records in your file, OPM does nothing. Does it come as a suprise that these EEO, Affirmative action employees can't get retirement right?
They're aren't smart enough to be sneaky.

Anonymous said...

This article is so true. I'm a CSRS employee whose last official workday was Jan. 31st, 2010. I am 58 with 31 1/2 years of service. I did not receive my 1st full annuity check until September. Luckily, I didn't have to dip into my savings to pay my bills. Why does it take the Human Resource Dept. 9 months to figure out a total annuity? When I tried calling the "800" number- I was on hold for over 1/2 hour and they couldn't tell me how far along I was in the system. It was such a frustrating experience.

Anonymous said...

The back log in processing retirements is not with the USPS, it is the Office of Personnel Management (OPM), which is a completely separate government organization. Let's not blame the USPS for something it has no control over.

(And what that also tells us that many many people have left over the past year.) OPM can't keep up.

National Whistleblower Allen Carlton said...

The Economist when deciding the American Holocaust decided death would help save money better not retirement so they sanctioned collusion; placed economics over justice to create terrorism to achieve the National Goals reduce government (we the people) and reduce gov't spending (expenditures, liabilities).

gregg said...

I can tell you the reason why people won't go now. During the last early out opportunity, the people that left had to wait almost a year to get their regular pension checks. OPM said they couldn't handle the volume. Typical government. So now, people are really scared to go. They might not be able to support themselves without a full pension check for that long.

Anonymous said...

The first annonymous responder to this article is a genious.Give this person Postmaster General's job immiediately!!!!!!

Anonymous said...

Maybe it was the postmaster general.

Anonymous said...

these law makers don't have a clue on how the post office runs or what it actually needs to get out of it's down turn.

Anonymous said...

allen carleton---take your medicine, allen---

J. Simmons said...

No matter the reason, for every year short of your minimum retirement age, you lose 1%. In other words, a 50-year-old employee who qualifies for a FERS VERA would lose at least 5%. This penalty is something you never hear mentioned.

Though I think cutting ANOTHER 200,000+ jobs is NOT the ansewer to USPS problems; any VERA would be much more successful if they removed this penalty. Robbing our retirement account surpluses to sweeten the next VERA is NOT the answer.

This article is terrible. I read another blaming periodical rates on decreases in productivity that was just as bad. Some of the comments are even worse. How 'bout the 'authors' having to actually vet some of the information and removing the ability to comment anonymously?

Anonymous said...

what planet u on there is no penalty on fers and a 50 year old mra is 56

Laura Carroll said...

what about the FERS annuity loss of5% per year under the age of 62?

Is that waived when they add on the 2 service years?