US Postal Service workers will soon receive a $7 per hour pension rate starting in 2019, a move aimed at making the service more affordable.
The rate will be in place starting January 1, 2019, as part of the Postal Service’s plan to boost profitability and reduce employee turnover.
Postmaster General Joseph Stiglitz, who will lead the new effort, told reporters in Washington on Tuesday that the Postal Workers Pension Fund (PPGF) is designed to be a stable and affordable investment.
“Pension funds are designed to take your risk,” he said.
“They are designed so that they’re going to pay your retirement at a rate that’s consistent with the cost of living in your area.”
The Postal Service will also pay $2 per hour for all other postal workers to begin the year, with an increase to $2.50 an hour for each additional year.
Postal Service employees can choose whether they receive a pension or other government-supported benefits such as food stamps.
The PPGF is managed by the Government Accountability Office and will have the authority to negotiate its pension rates.
The Postal Service has said that if workers earn more than $100,000 per year, they could receive up to a maximum pension of $1,800 per year.
Under the new rates, employees will receive $7 an hour over the life of the post office pension.
The rate will increase to about $7 at retirement, and then $7 in increments of $2 over 20 years, according to Stiglitzer.
That $7 increase will be paid on top of inflation.
Employees can also choose to take a lump sum payment, which is capped at $1.2 million per year for a total payout of about $1 million.
In addition, the Postal Union and the Postal Employees Association are among the groups pushing for a minimum wage increase for postal workers, with both groups calling for $15 an hour by the end of 2020.
Postmaster General Stiglitsay has previously said that the union and the AFL-CIO are seeking a $15 minimum wage, which would bring the US postal workforce to a $16.6 billion national minimum wage.