On October 6, the Postal Service’s Office of Inspector General released a white paper, RISC-WP-27-001, that runs four alternative pension arrangements through 2,000 simulations apiece with the actuarial firm Segal. The question is what the Postal Service’s retirement funding would look like in fiscal 2044 if Congress let the agency change course. It is serious work. It is also built on a premise the Postal Service itself abandoned last spring.
A Forecast for a Country That Does Not Exist
Every scenario in the paper, including the “current model” baseline, assumes the Postal Service makes all of its required pension contributions and amortization payments. The note beneath Table 1 concedes the problem: the agency has skipped amortization payments for years and paused its normal employer contributions in April 2026. The body adds detail. No CSRS amortization payments since FY 2017, none on the FERS side from FY 2014 through FY 2021, and only partial payments from FY 2022 through FY 2025.
So the baseline’s median result for FY 2044, a $27.3 billion deficit and a 92 percent funded ratio, describes a Postal Service that pays its bills. The real one told OPM in April that its Board of Governors was suspending FERS contributions to conserve cash, a move expected to free roughly $2.5 billion through September 30. Footnote 14 of the report adds that USPS said in August it had funded only $6.5 billion of the $10.3 billion it owed the pension fund for FY 2025. The agency’s third-quarter release calls its measures temporary and says the obligations must eventually be satisfied. GAO told House Oversight in March that missed pension contributions exceed $20 billion and that the agency could run out of cash as early as 2027.
The OIG argues that the relative advantages between models hold regardless of missed payments. That may well be true. But the dollar figures in its tables, the ones that will be quoted in hearings and press releases, are for a hypothetical agency with a functioning treasury.
The Free Lunch Comes With a Fifty Billion Dollar Check
The star of the paper is diversification: move the retirement assets out of Treasuries and into a 60 percent stock, 40 percent bond portfolio, and change nothing about benefits. At the median, the FY 2044 result flips from a $27.3 billion deficit to a $61.1 billion surplus, an $88 billion swing built on a projected 5.3 percent return against 3.9 percent for the Treasuries. The paper calls it the only scenario that does not hurt employees or retirees.
The same tables show the other side. In the 5th percentile market scenario, the diversified portfolio ends FY 2044 about $50 billion worse than the current model: a $154.9 billion deficit against $104.2 billion. The OIG calls that outcome unlikely and says stakeholders must weigh it.
The paper also trips over its own arithmetic in two places. Its conclusion says the median diversified outcome reaches full funding within 10 years. Its own Table 5 shows a median FY 2034 deficit of $10.7 billion. The executive summary has it right, describing a deficit $34 billion smaller than the current model’s at the ten year mark, which is improvement, not full funding. Separately, the executive summary credits the DC-only option with a surplus “almost $50 billion” higher than the current model in the best case. The body and tables put that $50 billion gap at the median. The best-case gap is about $43 billion. These are small errors, but the entire product here is numbers.
One more point. “Does not hurt employees” is not the same as “does not hurt anyone.” Inference, resting on the report’s own statements that benefits under a defined benefit plan are guaranteed and that the Postal Service must fund them from its revenue: if the portfolio underperforms, the promised annuities do not shrink, so the shortfall lands on the agency, and if the agency cannot pay, on Congress. The paper identifies the employer as the bearer of investment risk but never says who that is when the employer is out of cash.
Nine Years of Studied Neutrality
The paper states that it does not endorse or recommend any change. It is also the latest entry in a long OIG argument for the same one. In 2017 the OIG retained Segal to evaluate six diversified portfolios and found that all of them outperformed the Treasury-only approach. In 2023 it back-tested a 60/40 portfolio from 1972 and concluded the Postal Service would hold $1.2 trillion in retirement assets instead of $298 billion. This October paper cites a July 2026 OIG white paper, Options for Addressing the Postal Service’s Financial Gap, as its starting point.
Management is on the same page. According to an APWU summary of Postmaster General David Steiner’s March 17 House testimony, USPS asked Congress to let it diversify its retirement investments. An inspector general with no recommendations, an agency with a request, and a paper that supplies the arithmetic: nobody has to say the quiet part, because the tables say it for them.
The Scenarios Nobody Modeled
The paper’s four alternatives are diversified investing, a DC-only plan for new hires, a fixed COLA, and doubled employee contributions. What is absent is the other item on the USPS wish list. The same APWU summary says the Postal Service has asked the White House to direct OPM to correct the allocation of CSRS pension obligations, which USPS says has cost it more than $90 billion over fifty years. The OIG has written on that subject before, in 2010 and again in 2018. This paper does not model it.
Inference, resting on the report’s stated scope, which is retirement models and congressional action: the omission may simply reflect a narrow assignment. But a reallocation would cut USPS costs without market risk and without touching a single worker’s pay, which makes it the cleanest comparison point for the options that were modeled. A second unasked question: the report says USPS pension assets sit in a pooled fund that is legally required to hold special-issue Treasuries. Inference: pulling the Postal Service’s share out of that fund and into equities would presumably change how Treasury finances itself, and the paper is silent on that. Neither the pooled fund’s mechanics nor the cost to Treasury appears in any of its tables.
The Postal Service has, by GAO’s reckoning, until about 2027 before the cash runs out, a pension payment schedule it is not keeping, and a retiree health bill the paper says swells in FY 2031. The inspector general has produced a lovely map of where the money might have been. Congress will now decide whether to read it as a plan or as a forecast for a country where the mail pays for itself. The structural position — a federal entity accumulating obligations Congress will ultimately have to reckon with — is not unique to USPS. The Commodity Credit Corporation gives the Secretary of Agriculture a $30 billion line of credit Congress reimburses after the fact, and Ginnie Mae backs $2.6 trillion in mortgage securities with an explicit federal guarantee whose underlying risk its own watchdog says has never been formally assessed.
