Postal Rates Could Stabilize

WASHINGTON, DC—A future postage rate increase could be delayed until at least 2006 thanks to a review of the United States Postal Service (USPS) employees' retirement plan, says Post Master General John E. Potter.

This revelation comes after a review of the USPS' pension liabilities by the U.S. Office of Personnel Management. The review found that the current formula contained overly conservative interest assumptions under which the USPS contributes for its employees' retirement, creating an overpayment of pension liabilities.

Changes in the payment schedule will require a modification of the current law by Congress. This necessary change in the law would mean a reduction of postal costs of $2.9 billion in fiscal year 2003 and another $2.6 billion in fiscal year 2004. Changes proposed by the USPS and supported by the Bush Administration would have the USPS fully fund all of its future pension liabilities and correct its payment schedule for past liabilities.

If these changes are not passed, the USPS likely will file a new rate case with the Postal Rate Commission in the spring of 2003 that could lead to new and higher postage rates in 2004.