USPS Halts Pension Payments as Financial Pressures Mount

Postal agency moves to preserve cash while warning lawmakers of potential service disruptions within a year.

By yourNEWS Media Newsroom

The United States Postal Service has suspended employer contributions to a federal retirement system as part of an effort to stabilize its finances, warning that continued obligations under its current structure could leave it unable to maintain operations within the next year.

In a notice sent Thursday to the Office of Personnel Management, postal officials said they would temporarily stop making biweekly payments into the Federal Employees Retirement System. The agency said the pause is expected to conserve approximately $2.5 billion through the end of the fiscal year on Sept. 30. USPS typically contributes about $200 million every two weeks.

USPS Chief Financial Officer Luke Grossmann said the move is not expected to affect retirement benefits in the near term. He noted that employee contributions to FERS and payments into the Thrift Savings Plan would continue uninterrupted.

“The risk to the Postal Service and the American public from insufficient liquidity for postal operations dramatically outweighs any longer-term risk to the pension funds from not making the currently due payments,” Grossmann said.

Although federal law generally requires the contributions, the Postal Regulatory Commission approved a waiver allowing the agency to defer payments and make them up at a later date.

The decision follows warnings from USPS leadership about worsening financial conditions. During a March 17 hearing before the House Oversight and Government Reform Committee, Postmaster General David Steiner said the agency could face a critical liquidity crisis.

“Less than a year from now, the Postal Service will be unable to deliver the mail if we maintain the status quo,” Steiner told lawmakers.

He said the agency has already relied on extraordinary cost-saving measures and indicated that further steps could include reducing delivery schedules from six days per week to five or fewer. Steiner also raised the possibility of increasing the price of a first-class stamp to between 90 and 95 cents.

“At 78 cents, the U.S. First-Class Stamp is the lowest-priced in the industrialized world,” he said. “If we were to change the stamp price to 90 to 95 cents … that would largely solve our controllable loss.”

The agency’s financial strain reflects long-term trends, including declining first-class mail volume and rising operational costs. A March report from the U.S. Government Accountability Office found that USPS has recorded losses in nearly every fiscal year since 2007, accumulating roughly $118 billion in net deficits over that period.

To offset costs, the Postal Regulatory Commission has also approved a temporary 8 percent increase in priority mail and package rates, set to take effect April 26 and remain in place through Jan. 17, 2027.

Postal officials continue to press Congress for structural changes, warning that without reform, the agency’s ability to sustain nationwide mail delivery could be at risk in the near future.