USPS suspends contributions to employee pensions after warning of “cash crisis”

The United States Postal Service (USPS) is facing a financial crisis that has prompted the agency to suspend its contributions to the Federal Employees Retirement System (FERS), a pension plan for its workers and other civil servants. The decision to halt payments to the retirement plan is aimed at conserving cash for operations and other essential expenses, according to USPS spokesman David Walton.

The USPS typically contributes around $400 million per month to its employee pension plan. However, in a statement released on Thursday, the agency announced that it will temporarily suspend these payments while continuing to send worker contributions to the retirement plan. Additionally, the USPS will transmit employer automatic and matching contributions, as well as employee contributions to the Thrift Savings Plan, another retirement program for federal workers.

Postmaster General David Steiner recently warned Congress about the looming financial crisis facing the USPS, stating that without significant changes, the agency could run out of cash within 12 months. Potential solutions to address the financial challenges include raising the cost of a first-class stamp or reducing delivery frequency from six days per week to five or fewer.

The USPS has been grappling with high costs and declining mail volume for years, resulting in a $9 billion loss in 2025. Despite implementing a 10-year plan to reduce expenses and restore profitability, the agency continues to face significant financial hurdles as mail volume decreases and delivery costs rise.

By suspending payments to FERS, the USPS expects to free up approximately $2.5 billion in the current fiscal year. In addition to this measure, the agency announced plans in March to temporarily increase postage prices to offset rising fuel costs attributed to the conflict in Iran. An 8% surcharge will be added to some postage prices starting April 26, with the additional costs remaining in effect until January 17, 2027.

The USPS Chief Financial Officer, Luke Grossmann, emphasized that the risk of insufficient liquidity for postal operations outweighs any potential long-term risks to the pension funds from not making the current payments. These strategic decisions are crucial for ensuring the financial stability and sustainability of the postal service in the face of ongoing challenges.

In conclusion, the USPS is taking proactive steps to address its financial concerns and safeguard its operations amidst mounting losses. The temporary suspension of contributions to the FERS pension plan, along with other cost-saving measures, aims to secure the agency’s financial future and ensure the continued delivery of mail services to the American public.