Postal Service defaults again on Retiree Health Benefit prefunding

“We have not made the required $5.6 billion Retiree Health Benefits prefunding payment due September 30, 2013,” said USPS spokeswoman Patricia Licata in an e-mail to CNN. She added, “We have been saying for several months that we will be defaulting on this payment. This is the third time we have.”

The Postmaster General Patrick Donahue told the Senate on September 19 that the default would most likely happen, saying that the Postal Service was “in the midst of a financial disaster… burdened by an outdated and inflexible business model.”

Officials at the Postal Service have continuously complained about the congressional mandate that forces them to reserve billions of dollars every year for a retiree health care fund. The Postal Service had to default on the prefund payments for this program last year as well, and has pointed out that other agencies do not have to prefund for retirees in the same manner.

Around 150,000 Postal Service workers are expected to be laid off in the next two years, and stamp prices have recently increased to help bring in extra funds. However, Licata added: “Without passage of comprehensive legislation as outlined in our Five-Year Business Plan, current projections indicate that we will have a dangerously low level of liquidity in the foreseeable future.”