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WASHINGTON | Mon Sep 30, 2013 5:55pm EDT
(Reuters) - The U.S. Postal Service on Monday defaulted yet again on a prepayment for the healthcare of its future retirees as its finances remain in the red and legislative reform remains elusive.
The agency has blamed the payments, more than $5 billion a year as mandated by Congress to prefund the Postal Service's future retirees' healthcare, for contributing to annual losses of billions of dollars.
The requirement was set in 2006 when the agency was still thriving and before the economic crisis. But those massive payments, along with tumbling mail volumes, have since pushed the agency's finances to a precarious position.
Last year, the mandate accounted for a large portion of the Postal Service's $16 billion net loss.
"Without passage of comprehensive legislation as outlined in our five-year business plan, current projections indicate that we will have a dangerously low level of liquidity in the foreseeable future. Therefore, we will be unable to make the required $5.6 billion retiree health benefits prefunding payment due today," a spokeswoman for the agency said in an email.
Postmaster General Patrick Donahoe has begged Congress for legislative reforms, including elimination of the annual prefunding payments and allowing the agency to run its own healthcare system.
Without that flexibility to run its own affairs, innovate and raise revenue, Donahoe has said, the agency could require a taxpayer bailout of nearly $50 billion by 2017.
read more U.S. Postal Service defaults on $5.6 billion for future health benefits | Reuters
(Reuters) - The U.S. Postal Service on Monday defaulted yet again on a prepayment for the healthcare of its future retirees as its finances remain in the red and legislative reform remains elusive.
The agency has blamed the payments, more than $5 billion a year as mandated by Congress to prefund the Postal Service's future retirees' healthcare, for contributing to annual losses of billions of dollars.
The requirement was set in 2006 when the agency was still thriving and before the economic crisis. But those massive payments, along with tumbling mail volumes, have since pushed the agency's finances to a precarious position.
Last year, the mandate accounted for a large portion of the Postal Service's $16 billion net loss.
"Without passage of comprehensive legislation as outlined in our five-year business plan, current projections indicate that we will have a dangerously low level of liquidity in the foreseeable future. Therefore, we will be unable to make the required $5.6 billion retiree health benefits prefunding payment due today," a spokeswoman for the agency said in an email.
Postmaster General Patrick Donahoe has begged Congress for legislative reforms, including elimination of the annual prefunding payments and allowing the agency to run its own healthcare system.
Without that flexibility to run its own affairs, innovate and raise revenue, Donahoe has said, the agency could require a taxpayer bailout of nearly $50 billion by 2017.
read more U.S. Postal Service defaults on $5.6 billion for future health benefits | Reuters
