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Politics : The Trump Presidency -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (325277)	3/8/2025 3:09:55 AM
From: i-node	Read Replies (1) \| Respond to of 362460

It wasn't OK to require the Postal Service to prefund their pension plan to that extent to begin with. No other federal pension plan was required to be prefunded to that extent. Republicans did it in 2006 precisely because they knew it would make the P.S. look bad and would balloon their pension plan. Which in turn would bolster their plans to privatize it and the pension plan would be a very ripe cherry for any raider to raid a few years after getting control of it. All large pension should be "prefunded" to the extend actuarily required for retirements anticipated on a yearly basis. And in the private sector, this is required. What you call "prefunded" is known by CPAs and actuaries as "accruals". "The reason accruals became required for USPS is that unlike most federal agencies, which receive congressional appropriations to cover their share of pension costs, USPS is an independent agency expected to fund its operations—including retirement liabilities—through its own revenue, a requirement rooted in the Postal Reorganization Act of 1971. By the early 2000s, concerns emerged about the long-term sustainability of USPS's pension and retiree health benefit obligations, especially as mail volume began to decline with the rise of digital communication, putting pressure on its revenue. The PAEA, signed into law on December 20, 2006, was the culmination of these efforts. It mandated that USPS prefund its retiree health benefits by making substantial annual payments—approximately $5.4 to $5.8 billion per year—into the newly created Postal Service Retiree Health Benefits Fund (PSRHBF) from 2007 to 2016. This was an unprecedented requirement, as no other federal agency or private entity faced such an aggressive prefunding schedule. The goal was twofold: to ensure USPS could meet its future obligations without relying on taxpayer funds and to shift it away from the pay-as-you-go model, which risked ballooning costs as the workforce aged and retired. The roughly $5.6 billion annual figure was based on actuarial estimates of the present value of future retiree health benefits for current and past employees, amortized over a decade, though some argued it overestimated the liability by assuming all employees would remain with USPS until retirement." So, as a result of the USPS status as a more independent entity, it needed to comply with normal pension requirements which is, as you say, to "prefund" pension arrangements. The reason for this is that such an entity can suffer precipitous drops in revenues and must be prepared to pay pension holders. Now, the other side of the coin is they should NOT stupidly require investment in treasuries. This is not Social Security -- and there is no reason the pension couldn't just as easily allow slightly higher risk and quickly, for the most part, correct a lot of those losses. If all of government used accrual accounting it would be far easier for ordinary people understand why we say our federal government is in far worse fiscal condition than we are told. And this is the reason that businesses aren't allowed to use cash or other accounting methods for tax purposes if inventory is a material income-producing factor or the size of the entity Republicans did it in 2006 precisely because they knew it would make the P.S. look bad and would balloon their pension plan. Since APB Opinion No. 8, originally issued in 1966, it has been a fundamental requirement that pension plans of the type "Defined Benefit" should be accounted for on the accrual basis of accounting, in which the basic requirements were 1. Accrual of Pension Costs Over Service Periods 2. Use of Actuarial Methods 3. Settings Boundaries for Annual Pension Expense 4. Treatment of Past Service Costs 5. And a few additional general accounting requirements. One interesting point is there was no requirement of balance sheet disclosure of unfunded pension liabilities, however, there was a require they be reflected in Income statement, which implied that an adjustment would be required in those instances on the income statement. The point being that even if the balance sheet did not reflect unfunded liabilities, the income statement had to financial consequences of any funding shortfall. APB8 continues to be the foundational principles for pension reporting guideline 60 years later, even though twice superseded by FASBs, AND that employer costs MUST be accrued in any compliant presentation since the time of issuance in '66. At the time of issuance, many businesses were noncompliant, but this APB finally made clear that unfunded pension liabilities were in fact liabilities, and if you were not booking in balance sheet (as should be done) the total amount must be reflected in the Income Statement, and this ultimately transitioned into balance sheet reporting standards. IT IS NOT A GIMMICK TO REQUIRE REPORTING UNFUNDED LIABILTIES AS YOU SUGGESTED. IT WAS ESSENTIAL FOR INVESTORS TO KNOW HOW MUCH HAD TO BE PAID INTO THE PENSION FUND TO REASONABLY PROTECT ITS SOLVENCY. (Which of course, they didn't do with Social Security and still don't).