Postal pension payment bill signed into law

President Bush signed legislation Wednesday that would keep postal rates at the current level until 2006 and limit the amount of money the Postal Service puts into the Civil Service Retirement System.

The legislation, introduced in February by Sen. Susan Collins, R-Maine, locks in current postal rates until 2006 by reducing contributions to CSRS by $2.9 billion. The measure does not affect postal workers' pensions and will allow the Postal Service to pay down some of the nearly $15 billion it owes to the Treasury Department.

"I am pleased that the president has approved this legislation," Collins said. "While the constant barrage of rate increases is frustrating to most Postal Service customers, it is a critical economic issue for the $900 billion-dollar-a-year mailing industry and the 9 million workers it employs. Each Postal rate increase raises the cost of advertising and shipping, which, in turn, raises the cost of goods for everyone."

Last November, the Office of Personnel Management found that the Postal Service would pay more than $70 billion more than it needed to in order to cover the future costs of CSRS enrollees' pensions. OPM conducted the review at the request of the General Accounting Office, which has been trying to get a better handle on the Postal Service's retirement and health care liabilities.

The new law will reduce the Postal Service's debt by about $3 billion in fiscal 2003. The money saved on pension contributions in fiscal 2003, 2004 and 2005 will go toward the debt owed to Treasury. After 2005, the Postal Service and OPM will recalculate the amount owed.

The law also requires the Postal Service to work with the General Accounting Office to come up with a plan for the funds, which could include continuing to pay down the debt, covering retiree health benefits or making capital improvements. The extra money cannot be used to pay executive bonuses.