Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President November 2, 2005

Funding CSRS Employee Payment 7.0% Employer Payment17.4% Supplemental Funding$290M/Year FERS Employee Payment 7.0% Employer Payment18.4% % Retirement Systems

Fund Balances – 9/30/2004 CSRS$191B* FERS 48B 38B Total$239B $233B * Includes employer / employee payments through end of career Funded Present Value of Benefits $195B Retirement Systems

Escrow / Savings P.L Impacts $3.1B $6.3B $3.6B $4.1B Old CSRS Payments

Health Benefits Multi-Employer Accounting FY 2005 Current Employees $5,100M Retirees 1,495M Total $6,595M Present Value of Future Retiree Premium Payments September 2004 $48B – $59B   Range Based on 1% Difference in Long-Term Medical Inflation Present Value of Future Retiree Premium Payments September 2004 $48B – $59B   Range Based on 1% Difference in Long-Term Medical Inflation

MEDICARE MODERNIZATION ACT OF 2003

FY 2006 ISSUE UPDATE: MEDICARE PART D Retiree Drug Subsidy – Employers providing prescription coverage Federal Employee Health Benefits Plan – Office of Personnel Management (OPM) Administration Position – OPM will not apply

FY 2006 ISSUE UPDATE: MEDICARE PART D Support for USPS rebate filing  May 2, 2005, House Government Reform Committee letter requesting explanation of OPM position No response received  October 20, 2005, Joint letter – 59 members of Congress urging opportunity for Postal Service to receive subsidy USPS submitted application October 31, 2005

Richard J. Strasser, Jr. Chief Financial Officer & Executive Vice President November 2, 2005