Post Office to Stop Payments to Retirement Fund
WASHINGTON — To stave off insolvency, the Postal Service will discontinue legally required payments to its employees’ retirement fund on Friday, the agency announced Wednesday.
The announcement said that the post office hoped to save $800 million this fiscal year by stopping its payments to the Federal Employees Retirement System, which are $115 million every two weeks. Employee contributions from salary deductions will continue to be forwarded to the retirement fund.
The move will not affect pension payments for current retirees, according to a statement Wednesday from the Office of Personnel Management, which administers government retirement plans.
Federal terms have caused the service to overpay the fund, resulting in a $6.9 billion surplus, officials said. By suspending the payments, the money could be used to pay other bills.
“We need this cash throughout the rest of the year,” said Anthony Vegliante, the post office’s chief human resources officer, in a phone interview.
As the use of first-class mail has plummeted and budgetary woes have intensified in the past four years, the post office has responded by cutting about 110,000 workers and about $12 billion in costs, according to the statement. But the agency still expects a shortfall of more than $8 billion this year.
Mr. Vegliante said Congress needed to deal with the agency’s outdated business model and federal restrictions on its ability to manage itself. “Inside the Beltway, it’s the eternal debate,” he said. “We need action, not dialogue.”
House oversight committee leaders on both sides of the aisle agreed.
Representative Dennis Ross, Republican of Florida and chairman of the House oversight subcommittee on the federal work force, said in a statement Wednesday that Congress needed to approve wholesale structural changes for the post office, “including staff reductions, office closings, delivery changes and responsible benefit funding.” He said an overhaul bill would probably emerge from the committee within weeks.
Representative Elijah E. Cummings, the House oversight committee’s ranking Democrat, and Stephen F. Lynch, the federal work force subcommittee’s ranking Democrat, said in a statement that while suspending the payments might help in the short term, “the Postal Service will be unlikely to regain financial stability absent legislative action.”
Mr. Vegliante said that before Wednesday’s announcement the post office consulted the Office of Personnel Management and was told that neither it nor the Postal Service had the authority to stop the payments without legal or legislative action.
The agencies have asked the Justice Department’s legal counsel office to review the issue, and the post office agreed to resume the payments if the suspension was ruled invalid, the personnel office said.
By SEAN COLLINS WALSH
Published: June 22, 2011
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Jim has worked as a Portfolio Manager & Financial Advisor since 1996. In May 2005, Jim founded WHI Financial Services, LLC, WHIFinancial.com, a Registered Investment Advisory firm, with headquarters in Texas. His primary focus is on portfolio management, financial & retirement planning, and financial advisory & insurance services. Jim manages investment portfolios & advises individuals, small to mid-size companies, and non-profit organizations on a variety of financial and business issues.
Prior to founding WHI Financial Services, LLC, Jim worked as a portfolio manager & financial advisor for two international investment firms. From 2001 to 2005, Jim worked with Prudential Securities (merger with Wachovia Securities, now Wells Fargo Financial Advisors), and from 1996 to 2001, he was working with Merrill Lynch. While working with both Wachovia Securities and Merrill Lynch, Jim enjoyed dual responsibilities as a portfolio manager, financial advisor and leader of the Professional Development Program.
Jim's responsibilities as leader of the Professional Development Program included, recruiting, interviewing, training, and overseeing the daily operations of all financial advisors involved in the Professional Development Program. Jim was responsible for managing between 10-20 advisors, while still managing his own client investment accounts.
In addition to his experience in the financial services area, Jim has been involved in several start-up companies. Jim's Philanthropic work includes serving as President/Treasurer of a private foundation established to provide non-profit organizations financial assistance, and Chairman/President of the Believe In Your Dreams Foundation. In 2007, Jim established the Believe In Your Dreams Foundation, a 501(c)3 organization, to help individuals who are suffering from life-altering circumstances beyond their control.
Jim has taught investment, insurance, and credit repair classes through continuing education at universities in CA & TX since 1997. Jim attended the University of Minnesota where his focus was Management & Marketing.
Jim has recently written two books, one called "Your Financial Lifecycle" a book which describes several key investment topics everyone will face throughout their life, and a book titled, "The Truth about Your Credit Score", which defines how credit scores are calculated and how you can increase your credit score, including templates which you can use to send to creditors.
Jim's books can be purchased on Amazon.com, via Author search, or by emailing him directly at JimWigen@GetWealthyStayWealthy.com.
In the Fall of 2011, Jim will be starting his radio show called, The Jim Wigen Show, Teaching You to Get Wealthy & Stay Wealthy. You can hear his shows through streaming audio by visiting JimWigen.com.
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