CNN manages to confuse two major financial issues in its story on today’s USPS announcement on retirement funding. A story on the network’s web site reports incorrectly that the USPS announced it was cutting off payments to the future retiree health benefit trust fund:
For the first time, the U.S. Postal Service will ignore a federal requirement and stop making prepayments to its health care retirement fund in a bid to ward off insolvency.
The Postmaster General did announce several months ago that the USPS would not make its required annual $5.5 billion payment into the trust fund- but that payment isn’t due until September 30. What the USPS announced today was that it would stop making regular biweekly payments into the Federal Employee Retirement System (FERS). The agency’s FERS account already has a surplus of $6.9 billion, so the cutoff has no impact on actual payments to retirees.