>“[T]he PAEA required the Postal Service to calculate all of its likely pension costs over the next 75 years, and then sock away enough money between 2007 and 2016 to cover most of them.” The Week, April 16, 2018.
>FACT: the actuarial valuation methods used by the USPS are based only on accruals attributed to past service, no different than any other such valuation.
>The Postal Service Retiree Health Benefit Fund (PSRHBF) is a USPS-specific fund, and its 10-K report specifies that it uses the “aggregate entry age normal acturarial cost method.” For pension benefits, employees participate in the CSRS and FERS general civil servant pensions, using the same method. In this method, yes, the actuary calculates the value of all benefits to be paid out in the future, due to past and future service, and then subtracts out the value of the future accruals, to calculate the actuarial liability. In addition, the Civil Service Retirement and Disability Fund calculates a projection of liabilities 75 years into the future in its annual report, but this does not mean that 75 years’ worth of future accruals are advance-funded, only that the long-term sustainability of the system is measured over a 75-year period.
https://www.forbes.com/sites/ebauer/2020/04/14/post-office-p...
> In this method, yes, the actuary calculates the value of all benefits to be paid out in the future, due to past and future service, and then subtracts out the value of the future accruals, to calculate the actuarial liability.
I.e., the USPS has to raise the money to fund liabilities for 75 years, and it had to do so in 10 years, which essentially meant that they had to operate in the red making its financial situation even more complicated.
Your cite says they had to put aside money for all their pension costs over the next 75 years. Including people they haven't even hired yet.
My cite says that they had to calculate pension costs payable over the next 75 years that they already incurred. That's a much smaller number and matches the requirements for private companies.
You can find the explanation in several articles, for example:
"[the law] requires the self-supporting U.S. Postal Service, which receives not one dime in taxpayer subsidies, to fully fund its retirees’ health benefits for 75 years into the future. It also requires that money be set aside over a 10-year period, at a rate of more than $5 billion per year.
That means the postal service is now paying for the future health care of retirees it has not yet hired, and who in some cases have not yet been born. No other public or private company in the nation bears any kind of financial burden like that.
Even worse, none of that money is truly being set aside. Instead, it is going directly into the U.S. government’s general fund, and it’s being spent on current government operations. The set-aside is a theoretical accounting gimmick. Those future retirement liabilities are actually being added to the national debt."
https://roanoke.com/news/local/casey-the-most-insane-law-by-...
Because pensions go up with years of service you have to account for the worker continuing to work when calculating pension liability. As an example, say a pension vests after 5 years. What should the pension cost be for an employee in year 2? The best answer is something like 1/5 of the NPV of their pension.
That's what they mean by "benefits to be paid out... due to .. future service".
>That means the postal service is now paying for the future health care of retirees it has not yet hired,
Did you not see the part of my cite where that is specifically called a myth?
?
Did you not read my post where it said:
> The best answer is something like 1/5 of the NPV of their pension.
Of course nobody is required to pay the entire NPV of the pension today. For an employee that is retiring in 30 years they are required to pay 1/30th of the NPV of their pension each year. That's what the USPS is required to do. They're not being required to pay the entire cost of their employee pensions up front.
1: https://about.usps.com/who-we-are/financials/annual-reports/... (page 26)
"[the law] required the post office to calculate all of its retiree pension and healthcare costs for the next 75 years, including for people it hadn't even hired yet, and put away enough over the next 10 years to cover them. To put this in perspective, that'd be like you only working from age 18 to 28 and then expecting to live on that income until you were 103 years old."