Please see the Postal Service's response to this article: USPS Responds To Criticism of Its Annuity Estimates.
Amidst all of the postal reform proposals that went nowhere the past few years, the one tactic that has definitely worked for the U.S. Postal Service is getting employees to retire early.
The tactic would work even better if the Postal Service stopped confusing or misleading potential retirees – by providing them with incomplete or just plain wrong information about what their retirement benefits will be.
Here’s the latest chapter in this sorry saga: In the most recent round of VERA (Voluntary Early Retirement) offers, many among the thousands of affected postmasters have received annuity estimates containing no calculation of what their monthly annuity payments will be, reports Roseanne Jefferson, a retired USPS benefits manager, in her Postal Retirement column.
She notes that the postmasters have to decide by “an irrevocable drop dead date” whether to retire without knowing what their retirement income will be.
“Who does that?!" she asks. "Who retires not knowing how much EVEN the gross annuity is, even before any deductions are made? Seriously….do you apply for a job, get the job, and then go home and tell your spouse, hey honey, I got a job…and the spouse says….GREAT!!!, how much will you be making….and the newly employed spouse says, gee I don't know, I guess I will find out when I get my paycheck.”
“The Postal Service has done NOTHING to improve their FERS [Federal Employee Retirement System] annuity estimates,” says Don Cheney, who has been working on USPS early-retirement issues for a decade, often on behalf of fellow APWU members. “They still don’t include the FERS Annuity Supplement when it is applicable."
Confusion is rampant
"Employees don’t know when they are eligible for the FERS Annuity Supplement or how much it is,” Cheney adds. “The rules in FERS are complex, unlike the old CSRS [Civil Service] Retirement System. Confusion is rampant, because local personnel offices were abolished in 2007” when the work was contracted out.
The Postal Service’s practices violate the Office of Personnel Management (OPM) instructions, Cheney claims.In a list of annuity estimates an employing agency must provide upon request, OPM’s handbook provides this instruction (in Section 40A2.1-3, pp. 20-21): “For FERS employees eligible to receive an annuity supplement, estimate the monthly amount payable to age 62.”
The case of the missing annuity estimates is just another chapter in a story that has been unfolding for years. In 2009, for example, only 3% of the 150,000 employees offered a VERA accepted, partly because many mistakenly thought they would be subject to a penalty.
Those eligible for a VERA frequently receive FERS annuity estimates that understate their annuity payments by more than $1,000 per month. And at times many postal retirees have had to wait seven to nine months to receive their full retirement payments.
No one wins when such incompetence discourages employees from retiring. Certainly not the Postal Service, which is desperate to reduce expenses in light of declining revenues. And with half of the postal workforce being 50 or older, plenty of employees are eager to leave if they could just be sure what their retirement income will be.
By enabling USPS to replace long-time employees with lower-paid new hires and to eliminate jobs without violating no-layoff clauses, the various early-retirement drives are probably saving the Postal Service billions of dollars annually.
Just think how much greater the savings would be if the Postal Service could just do what is commonplace among large businesses – provide accurate and timely retirement information to its employees.