US Postal Service 2006 Annual Report Download - page 55

2006 Annual Report United States Postal Service | 53
Note 10 – Retirement Programs
Pension Programs
Our employees participate in one of the following pension programs based
upon the starting date of their employment with the federal government.
Employee and employer contributions are made to the Civil Service
Retirement System (CSRS), the Dual Civil Service Retirement System/
Social Security (Dual CSRS), or the Federal Employees Retirement System
(FERS), which are administered by the Office of Personnel Management.
Employees may also participate in the Thrift Savings Plan (TSP), which
is a defined contribution retirement savings and investment plan. Postal
Service employees are authorized to participate in the TSP by the
Federal Employees Retirement System Act of 1986. The TSP Program is
administered by the Federal Retirement Thrift Investment Board.
CSRS
Under the Postal Reorganization Act, officers and career employees hired
prior to January 1, 1984, are covered by the Civil Service Retirement
System, which provides a basic annuity toward which we and the
employee contribute. We do not match TSP contributions for employees
who participate in CSRS. In addition, employees hired before January 1,
1984, could choose during certain periods in 1987, 1988 and 1998 to
participate in FERS.
DUAL CSRS
Employees with prior U.S. government service who were hired between
January 1, 1984, and January 1, 1987, are covered by Dual CSRS, which
consists of a basic annuity and Social Security. We and the employee
contribute to Social Security and the basic annuity at the rate prescribed
by law. We do not match TSP contributions for employees who participate
in Dual CSRS.
FERS
Effective January 1, 1987, officers and career employees hired since
December 31, 1983, are covered by the Federal Employees Retirement
System Act of 1986, except for those covered by Dual CSRS. Included
are employees formerly covered by CSRS who elected in 1987, 1988 and
1998 to participate in FERS.
This system consists of Social Security, a basic annuity plan, and TSP. We
and the employee contribute to Social Security and the basic annuity plan
at the rate prescribed by law. In addition, we are required to contribute to
TSP a minimum of 1% per year of the basic pay of employees covered by
this system. We also match a voluntary employee contribution up to 3% of
the employee’s basic pay, and 50% of a contribution between 3% and 5%
of basic pay.
Employer and Employee Contributions
Employer and employee base contributions, as a percentage of employee
basic pay, are as follows for each of the three plans for 2006, 2005 and
2004:
Retirement Contribution 2006 2005 2004
(Percentage)
CSRS Employer 17.4 17.4 17.4
CSRS Employee 7.0 7.0 7.0
Dual CSRS Employer 18.0 18.0 18.0
Dual CSRS Employee 0.8 0.8 0.8
FERS Employer 11.2 11.2 10.7
FERS Employee 0.8 0.8 0.8
The number of employees enrolled in each of the retirement plans at the
end of 2006, 2005 and 2004 is as follows:
Retirement Enrollment by
Program 2006 2005 2004
(Actual numbers)
CSRS 157,945 171,958 188,670
Dual CSRS 8,150 8,640 9,238
FERS 530,043 524,118 509,577
Expense Components
The following table lists the components of our total retirement expenses
that are included in compensation and benefits expense and related inter-
est expense in the Statements of Operations for 2006, 2005 and 2004.
Retirement Expense 2006 2005 2004
(Dollars in millions)
CSRS $ 1,450 $ 1,533 $ 1,641
FERS 2,652 2,510 2,255
FERS Thrift Savings Plan 960 912 877
Dual CSRS 75 78 76
Social Security 1,843 1,750 1,610
CSRS “Supplemental Liability” 26 27 12
Subtotal Expense $ 7,006 $ 6,810 $ 6,471
CSRS “Supplemental Liability”
Interest Expense 231 263 103
Total Retirement Expense $ 7,237 $ 7,073 $ 6,574
Employer cash contributions to retirement plans were $5,122 million
in 2006; $5,014 million in 2005 and $4,827 million in 2004. These
amounts do not include Social Security contributions and interest expense
on deferred retirement liabilities.
Notes to the Financial Statements