Originally Posted by ivwshane
So they are paying for future liabilities? As in paying for something that hasn't happened? As in pre-paying? Did you read what you wrote?
Again, there is nothing wrong with good planning but you don't kill yourself in order to do it.
No, they are paying the PRESENT value of FUTURE liabilities. This can be a bit confusing for those without finance or accounting backgrounds so let me give you a simple example.
Let's say they know they have to pay an employee $10,000 in 10 years, and that the pension fund is expected to earn a 5% return between now and then. They would have to put away $6,139 today to have the pension be fully funded.
In general, pensions are supposed to be fully funded so the pensioners do not have to rely on the institution having the extra cash laying around in the future to make good on their obligations. USPS does not currently meet this standard, and the law gave them 10 years to catch up and get fully funded, which they should have been in the first place. This will protect retirees and taxpayers should the USPS fall into financial distress in the future.