ISSAS AT IT AGAIN! The comments of Inspector General David Williams are worth noting. One of Williams main points is that it’s important to understand the historical context of how the prefunding obligation came about in the first place. The Inspector General writes this in his letter to the GAO: “The Postal Service started prefunding its retiree health benefits as a result of the discovery that, due to external fund management misjudgments, it was on track to seriously overfund its pension obligations by $78 billion. This discovery was one of several fund management issues identified about the same time. The decision to turn a mistake into a second prefunding obligation created its own problems. A 10-year schedule of prefunding payments was structured toward a 100-percent funding goal. The aggressive payment schedule appears to have been set based on byzantine ‘budget scoring’ considerations rather than actuarial assumptions or an evaluation of the Postal service’s ability to make the payments.”
Posted on: Mon, 05 Jan 2015 00:19:04 +0000
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