P o s t a l Service May Delay
Planned Increase in Rates
By RICK BROOKS
Staff Reporter of THE WALL STREET JOURNAL
The U.S. ****** Service is on the verge of putting off the next increase in postage rates until 2006 as a result of legislation that would change how it contributes to a worker retirement fund.
The House is expected Tuesday to approve a proposal that would let the agency shrink the payments it makes to a pension fund for employees hired before 1984, freeing up extra funds to reduce the ****** Service's debt and hold rates steady. The Senate passed an identical bill last week, which is supported by the Bush administration.
Approval of the retirement-funding change would provide some relief to consumers and businesses already hit by three rounds of rate increases since the start of 2001. First-class stamps have jumped 12%, almost three times as much as overall inflation, including a three-cent increase to 37 cents last summer. Without the change, ****** officials had worried that they might be forced as soon as this month to start seeking approval for the next increase.
The change was proposed after a review found that investments made by the Treasury Department had generated higher-than-expected returns, meaning the gap between the ****** Service's future obligations to the retirement fund and the amount already paid was $27 billion smaller than previously thought.
But legislation bogged down over concerns that included how the post office would use the extra funds. To end the logjam, the bill requires the ****** Service to steer all its expected savings through fiscal 2005 to debt reduction and postponing rate increases. The savings also can't be counted toward bonuses for ****** executives, and Congress still would have to approve the agency's plans for using any additional funds after 2005.
Delaying the next rate increase until 2006 gives the post office more time to try to hang onto customers who might pay bills online or defect to rivals such as United Parcel Service Inc. First-class deliveries are headed for a six-year low in the fiscal year ending Sept. 30, a slide that is making it hard for the ****** Service to expand its delivery network. It is hiring 4,800 letter carriers this year.
John Campanelli, president of the logistics unit of R.R. Donnelley & Sons Co., a commercial printer based in Chicago, predicted that many mailers would have "a lot more confidence about using the mail."
A ****** Service spokesman said the agency is "pleased that [the legislation] is moving forward." The change, which doesn't affect worker retirement benefits, would save the agency an estimated $2.9 billion this fiscal year.
Planned Increase in Rates
By RICK BROOKS
Staff Reporter of THE WALL STREET JOURNAL
The U.S. ****** Service is on the verge of putting off the next increase in postage rates until 2006 as a result of legislation that would change how it contributes to a worker retirement fund.
The House is expected Tuesday to approve a proposal that would let the agency shrink the payments it makes to a pension fund for employees hired before 1984, freeing up extra funds to reduce the ****** Service's debt and hold rates steady. The Senate passed an identical bill last week, which is supported by the Bush administration.
Approval of the retirement-funding change would provide some relief to consumers and businesses already hit by three rounds of rate increases since the start of 2001. First-class stamps have jumped 12%, almost three times as much as overall inflation, including a three-cent increase to 37 cents last summer. Without the change, ****** officials had worried that they might be forced as soon as this month to start seeking approval for the next increase.
The change was proposed after a review found that investments made by the Treasury Department had generated higher-than-expected returns, meaning the gap between the ****** Service's future obligations to the retirement fund and the amount already paid was $27 billion smaller than previously thought.
But legislation bogged down over concerns that included how the post office would use the extra funds. To end the logjam, the bill requires the ****** Service to steer all its expected savings through fiscal 2005 to debt reduction and postponing rate increases. The savings also can't be counted toward bonuses for ****** executives, and Congress still would have to approve the agency's plans for using any additional funds after 2005.
Delaying the next rate increase until 2006 gives the post office more time to try to hang onto customers who might pay bills online or defect to rivals such as United Parcel Service Inc. First-class deliveries are headed for a six-year low in the fiscal year ending Sept. 30, a slide that is making it hard for the ****** Service to expand its delivery network. It is hiring 4,800 letter carriers this year.
John Campanelli, president of the logistics unit of R.R. Donnelley & Sons Co., a commercial printer based in Chicago, predicted that many mailers would have "a lot more confidence about using the mail."
A ****** Service spokesman said the agency is "pleased that [the legislation] is moving forward." The change, which doesn't affect worker retirement benefits, would save the agency an estimated $2.9 billion this fiscal year.
