Changes in Financial Reporting under the USPS Fairness Act
The Postal Service Retiree Health Benefits Fund (PSRHBF) trust fund calculations and financial reporting processes for the United States Postal Service (USPS) have undergone significant changes due to Section 102 of the Postal Service Reform Act (PSRA), also known as the “USPS Fairness Act.” These amendments clarify how the Office of Personnel Management (OPM) will calculate payments to the PSRHBF and perform financial reporting.
Key Amendments to § 890.1613
OPM is proposing updates to § 890.1613 “Contributions and Withholdings” to delineate the elements involved in the yearly financial reporting calculations mandated by the PSRA. This proposal aims to ensure transparency and accuracy in the reporting of USPS’s pension and post-retirement health obligations.
Reporting Requirements
According to 39 U.S.C. 3654(b), USPS must file an annual report with the Postal Regulatory Commission detailing the funded status of its pension obligations under the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS), as well as its post-retirement health obligations under the Federal Employees Health Benefits (FEHB) Program. OPM is responsible for these calculations.
Calculation Methods and Assumptions
The PSRA stipulates that these financial figures must be derived using economic and actuarial methods consistent with those used to determine the USPS’s surplus and supplemental liability. Specifically, Section 8909a(e) of the PSRA requires that calculations be based on the net present value of future net claims costs for current and eligible future USPS retirees.
Clarifications and Updates
OPM has proposed several key clarifications:
- Net Claims Costs Definition: The term “net claims costs” used in calculations per 5 U.S.C. 8909a(e)(1) is equivalent to “estimated net claims costs” as defined in 5 U.S.C. 8909a(g).
- Computation Methods: Post-retirement health obligation calculations will utilize the aggregate entry-age normal cost method described in 5 U.S.C. 8331(17) and adhere to 5 U.S.C. 8348(h).
- Relevant Population: Calculations will include:
- Current Annuitants: USPS annuitants as of September 30 of the relevant reporting year.
- Current Employees: USPS employees eligible for retirement benefits as of September 30 of that year.
These proposed amendments by OPM aim to enhance the clarity and accuracy of financial reporting for USPS’s retiree health benefits and pension obligations. By refining the calculation methods and assumptions, the USPS can ensure a more transparent and reliable financial reporting process.
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