The coronavirus pandemic created all sorts of new problems for the U.S. Postal Service (USPS), but the most serious financial issue the agency faces was a crisis long before anyone had heard of COVID-19—and it won’t be solved with a vaccine.
Like many other government entities, the USPS has overpromised and undersaved for its employees’ retirements. The pension system for retired postal workers has a $50 billion unfunded liability—that’s an accounting term for the gap between what actuaries expect the system to owe current workers and retirees for the rest of their lives and the revenue it’s expected to take in from paychecks and investment earnings. Meanwhile, the USPS fund that’s supposed to cover health care expenses for retired workers is facing a $70 billion unfunded liability, and it has less than half the assets necessary to cover expected future costs.