Postal Workers Alarmed About Their Retirement: 'Sheer Chaos' Over Account Cut, Worker Says

Postal worker: "Sheer chaos" over retirement account contribution changes.

ByABC News
June 22, 2011, 3:47 PM

June 23, 2011 — -- A U.S. Postal Service decision to suspend employer contributions to a postal worker retirement account is causing alarm among its employees.

"It was sheer chaos on the work floor when everybody found out about it this morning," said Clarice Torrence, who has worked for the Postal Service for 32 years. "How long is this going to go on? Are they going to play catch-up?"

The Postal Service announced Wednesday it will suspend the $115 million payment it made every other week to the Office of Personnel Management's retirement system beginning June 24. Cutting the payments to the defined benefits of the Federal Employees Retirement System (FERS) is expected to save the Postal Service approximately $800 million this fiscal year.

The FERS account had about a $6.9 billion surplus, according to the Postal Service.

Torrence, a 60-year-old postal worker in New York City, said though her employer has said current or retired employees will not be affected, she is concerned. While her children have grown and left the nest, most of her co-workers still need to support their families and children in college.

"It's something we need answers to as soon as possible," she said.

While the Postal Service has said this is a temporary measure, the president of the American Postal Workers Union said he is not assured that employees will not be negatively affected.

"We will take every step necessary to ensure that retirement benefits are protected. We are currently evaluating the best course of action," union president Cliff Guffey said in a statement.

Dave Partenheimer, a spokesman for the Postal Service, said that this is "not a long-term solution" and Congress must pursue legislation allowing for major changes, including a five-day delivery week.

Moving to a shorter delivery week could save the Postal Service $3.1 billion each year, Partenheimer said.

"There's a number of things we're doing," Partenheimer said. "We've been cost-cutting for years."

Over the past four fiscal years, the Postal Service has reduced by 110,000 career positions and now has a total of 563,000 career employees, according to Partenheimer. That saved $12 billion in costs.

The Postal Service has also closed some post offices, while expanding retail outlets such as those in drug stores and office supply stores.

Partenheimer added that the Postal Service has introduced new products and services, such as its flat-rate boxes advertised through television marketing.

"That's one of the things that have really taken off and helped us on the product size of our business," he said.

The Postal Service's board of governors announced its decision to eliminate their FERS payments on Wednesday.

"We will continue to transmit to OPM employees' contributions to FERS and also will continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan," said Anthony Vegliante, chief human resources officer and executive vice president of the U.S. Postal Service.

Guffey said Congress should pass H.R. 1351, which he said would allow the Postal Service to apply pension overpayments to the pre-funding obligation.

"This bill would provide the USPS relief from its financial crisis at no cost to taxpayers," Guffey said in a statement.