That means, for financial advisors and fiduciaries, first class mail - necessary for so many communications with clients and vendors – may still be frustrating. Advisors should take note that DeJoy’s plan to slow the mail to save costs will “disproportionately affect Western states and parts of Texas and Florida.”
Everyone in the United States has seen the hard work and dedication the US Postal Service (USPS) has given during the pandemic. Delays in USPS mailings were felt by all, but for those who relied on the USPS for important checks and information, like investors, delays were often critical. Financial advisors and fiduciaries also felt the pinch from those delays on their first class mail. While new laws, like that published in June of 2020 by the Department of Labor made it easier for plan administrators to contact plan participants via electronic disclosure, many investors and retirees still depended on the US mail. As one advisor said: "USPS handles roughly 90% of our mailing to our office and is also the way that our clients receive account updates if they choose to decline electronic statements," he said.[1] Many investment and retirement related decisions still rely on the USPS. As ERISA requires, “the plan administrator shall use measures reasonably calculated to ensure actual receipt of the material by plan participants, beneficiaries and other specified individuals. Material distributed through the mail may be sent by first, second, or third-class mail.” Employers can also distribute plan material across a variety of methods and can do so by employee type so long as it is “reasonably calculated to ensure actual receipt.”[2] Many Americans, in fact, most Americans (70% of them) said snail mail is more personal than the internet.”[3]
Changes to the US Postal Service may seem like a huge benefit to investors and fiduciaries. But a deeper dive into the recent changes, as well as the USPS’s requests leading up to them, may in fact result in longer mail times, not shorter ones.
First, a few quick details. What is first class mail anyway? The USPS defines mail by use and delivery times. For first class mail, it must be used for handwritten or personal correspondence (this includes all correspondence related to insurance, credit cards, investment or legal documents, invoices, checks and statements of account). This type of mail is sealed against postal inspection. “[4]
Next, a bit of history. In 2021, the USPS published rules trying to add two days to first class mail delivery times so that it could move away from air to surface transport for first class mail.[5] The USPS is overseen, in part, by the Postal Service Regulatory Commission (PSRC). In response to that 2021 request, the PSRC said that the USPS should “monitor more closely customer satisfaction going forward, particularly for customer and mailer segments that the change may most impact; [and] Be more transparent in the feedback it receives from stakeholders and keep its plan flexible to the needs of customers, stakeholders, and the general public.[6]
The USPS’s 2021 request was included in a new bill that passed the Senate in 2022 and looks likely to become law. The bill is supported by the four postal unions, the mailing industry and Postal Service management. It includes changing how the USPS books its retirement liabilities and also makes Medicare more available to USPS workers. While it may seem related to the USPS’s excellent performance during the pandemic, apparently it was more than 15 years in the making.[7] By way of reminder, the USPS does not rely on taxpayer revenue. Instead it must generate its own revenue. And according to some sources, it generated $73 billion in operating revenue in 2020. “If it were a private sector company, the Postal Service would rank 46th in the Fortune 500.”[8]
Which is how we arrive, thirdly, at what might be the new law. It is predominantly a bill about the finances of the USPS and the wellbeing of postal workers. As the Congressional Research Service, an arm of the Library of Congress involved in researching legislation and policy, summarized that the bill did four things. (1) It establishes a federal benefits program. It also (2) allowed USPS retirees to enroll in Medicare. (3) It repeals the requirement that the USPS annually prepay future retirement health benefits. Finally, (4), it allows the USPS to create agreements with states, tribes and other government agencies to provide non-postal services that might raise revenue.[9] Many of the headlines made by the bill were related to the change in prepaying healthcare costs. According to the House Oversight Committee, that change alone will save the USPS nearly $50 billion over the next decade.
But key parts of the bill may impact your finances and wellbeing. How? The legislation will also require the USPS to create an online dashboard with local and national delivery time data. In that way, the USPS must meet that requirement from the PSRC to be more transparent in the feedback it gets from customers as well as more closely monitor customer needs.
It is possible that this bill may lengthen mail times, but not as far as the current Postmaster General DeJoy had stated his intentions were. Previously, his plan was to make first class mailings more difficult. He said last year that he planned to cuts to post office hours and make significant changes to first class mail.”[10] His plan included “decommissioning hundreds of high-speed mail-sorting machines, eliminating overtime, banning additional trips to deliver the mail and removing sidewalk mailboxes that get less than 25 stamped mail pieces per day.”[14] This new bill will “codify a minimum of six-day delivery of mail and packages into federal law.”
Critics of the bill say it doesn’t go far enough. Paul Steidler, a postal service expert at the Lexington Institute says it does “nothing to improve mail service.” That means, for financial advisors and fiduciaries, first class mail - necessary for so many communications with clients and vendors – may still be frustrating. Advisors should take note that DeJoy’s plan to slow the mail to save costs will “disproportionately affect Western states and parts of Texas and Florida.” Now may be an excellent time to review the potential new law with your administrative staff to make sure all compliance issues can be handled appropriately.
[1] https://www.businessnewsdaily.com/15791-small-business-impacts-of-usps-delays.html
[2] https://complianceadministrators.com/delivery-methods
[4] https://delivery.rice.edu/overview/us-post-office
[7] https://apwu.org/news/postal-service-reform-act-passes-senate-will-become-law
[9] https://www.congress.gov/bill/117th-congress/house-bill/3076
[10] https://www.washingtonpost.com/business/2021/03/22/usps-dejoy-plan
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
get xpress proposal
