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Federal Employees News Digest : Oct. 29, 2012
4 Visit us on the Internet at www.FederalDaily.com 2011—$11.4 billion into the Federal Employees Retirement System, and the remainder into the Civil Service Retirement System—and has had a running surplus since 1992. Smaller pay increases “The primary reason for the FERS surplus is that Postal Service employees have received smaller pay increases than assumed,” the IG report notes. “General increases have been lower than predicted, and postal employees tend to go through fewer steps in their pay scale than typical federal employees, so they reach the top step more quickly. Since more than 70 percent of postal craft employees have already reached the top of their pay scale, it is likely that the current salary growth assumptions overstate future salary growth.” According to the Oct. 16 report, another thing that makes the postal population different—and which also drives the over-funding—is that actual cost-of-living adjustments for annuitants have been lower than assumed, reducing the liability. Also, postal employees’ demographic charac- teristics and career patterns are different from other federal employees, the Hay Group found. Postal workers are “less likely to leave their posi- tions and withdraw from the system, less likely to take early retirement, yet more likely to die while employed or retire on disability.” All of those char- acteristics also help to lower the actual liabil- ity, and push up the surplus. Based on these and other factors, the Hay Group concluded that estimates of Postal Service liability should be made using USPS- specific assumptions rather than the federal assumptions that have been used. “The Postal Service cannot afford to make pension contributions that are not necessary for future benefits,” the report stated. After reviewing the Postal Service’s FERS liability in light of the different characteris- tics and patterns it found in the Postal Service FERS population, the Hay Group also suggested that the USPS FERS surplus may be much larger than $11.4 billion. “Hay Group found that recalculating the Postal Service’s liability estimate based on Postal Service- specific assumptions increases the FY 2011 su plus from $11.4 billion to $24.0 billion,” the report stated. “Most of the increase in the surplus is attributable to the change in the salary growth assumptions. To see more, go to: http://tinyurl.com/9nykrv6. continued from page 3 October 29, 2012 Vol. 62, No. 16 4 Visit us on the Internet at www.FederalDaily.com continued on page 8 USPS FERS Liability, Assets and Surplus In Millions of Dollars (OPM Actuarial Valuations) Year ending Sept. 30 Actuarial Acrued Liability Postal FERS Assets Surplus 2002 $31,600 $38.532 $6,932 2003 $34,400 $43,056 $8,656 2004 $38,200 $47,732 $9,532 2005 $44,600 $52,800 $8,200 2006 $49,300 $58,000 $8,700 2007 $55,100 $63,500 $8,400 2008 $62,800 $69,300 $6,500 2009 $68,300 $75,200 $6,900 2010 $69,900 $80,800 $10,900 2011* $75,900 $87,300 $11,400 *For 2001, liability, assets ansd surplus were projected by OPM from its 2010 estimates. 2013 Federal Employees Almanac Your One-stop Resource on Federal Benefits Reserve NOW for Best Savings! www.FederalDaily.com/catalog • 800.989.3363 Shipping February 2013 Celebrating 60 Years of the Almanac!
Oct. 22, 2012
Nov. 5, 2012