In addition, the Service reported  in its fiscal year 2000 audited financial statements an outstanding liability  for future retirement benefits of $32.2 billion (excluding $16.5 billion of  future related interest charges over 30 years) due to obligations that made  the Service liable for pay increases that employees received under terms of  new labor contracts and for COLAs to retirees, who retired on or after  July 1, 1971, and their survivors, under the CSRS retirement plan. An Additional Retirement Benefit: The Post-Retirement Health Benefit Program

Although not part of a retirement plan, the Post-Retirement Health Benefit  Program is an additional benefit available to USPS retirees. USPS estimates that the annual cost  of this benefit will increase from $744 million in fiscal year 2000 to about  $2 billion in fiscal year 2010. When the cost of the post-retirement health benefits of $744 million for  fiscal year 2000 is added to the Service’s total retirement costs of  $8.5 billion for fiscal year 2000, the total for retirement-related costs  becomes $9.3 billion in fiscal year 2000. USPS projects that in fiscal year  2010, these total retirement-related costs will increase to $2 billion and  $14 billion, respectively, for a total of $16 billion. Questions for Further Consideration and Analysis

As the Transformation Plan Task Force examines the impact of these  retirement costs and liabilities on the Service’s overall financial condition  and future operations, there are key questions that need to be addressed.
What GAO Found

This report identifies long-term structural or operational issues that may affect the U. S. Postal Services's (USPS) ability to provide affordable universal postal service on a break-even basis. One key issue is the Service's retirement costs and future liabilities. USPS had a net loss of $199 million in fiscal year 2000 and recently announced a $1.7 billion net loss for fiscal year 2001. The impact of September 11 and the subsequent anthrax mailings on the volume and the cost of future mail service is unclear. USPS' annual retirement plan costs are projected to rise significantly in the next 10 years--from $8.5 billion in fiscal year 2000 to $14 billion in fiscal year 2010. USPS also faces mounting debt because of pay increases resulting from new labor contracts and annual cost-of-living adjustments for retirees. USPS reported an outstanding liability for future retirement benefits of $32.2 billion as of September 2000, and anticipates paying another $16.5 billion in interest on this liability over 30 years. The Post-Retirement Health Benefit Program--an additional benefit available to USPS retirees--cost $744 million in fiscal year 2000. When this benefit is added to the retirement plan, it raises total retirement costs for fiscal year 2000 to $9.3 billion. USPS projects that this additional post-retirement health benefit will cost $2 billion in fiscal year 2010, raising the Service's total retirement costs to $16 billion that year.