USPS suspends pension contributions, sounding alarm for impending financial crisis
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The United States Postal Service is suspending employer pension contributions for employees starting Friday, exposing a looming cash shortfall, the agency announced Thursday.
The move, which affects the Federal Employees Retirement System (FERS), comes weeks after the Postal Service warned Congress that it could run out of cash in less than a year without significant changes, including changes to pension costs and stamp prices.
USPS emphasized that the temporary suspension will not have an immediate impact on current or future retirees.
“There won’t be any immediate negative impact on current or future retirees if FERS regular cost payments are temporarily withheld,” said Post Office Chief Financial Officer Luke Grossmann.
POSTAL SERVICES SAYS CASH COULD RUN OUT IN LESS THAN A YEAR WITHOUT CHANGES
A United States Postal worker delivers packages on Cyber Monday in New York Dec. 1, 2025. (Bess Adler/Bloomberg via Getty Images/Getty Images)
The USPS has reported growing losses over the years, including $118 billion since 2007, as volumes of its most profitable product, first-class mail, have fallen to their lowest levels since the late 1960s.
The financial crisis is exacerbated by global inflation, high inflation and recent fuel price hikes, as well as growing competition from private carriers such as Amazon, which now delivers many of its packages.
The USPS said it typically sends the Office of Personnel Management (OPM), which oversees the agency’s retirement accounts, about $200 million every two weeks to cover pension costs.
By stopping the payments, the agency expects to free up about $2.5 billion in the current fiscal year.
Although the agency has suspended payments to employers, it said it will continue to transfer deductions to retirement accounts.
USPS MAY OFFER SERVICE IN CERTAIN LOCATIONS AS IT SEEKS TO CUT COSTS
Amazon Inc. package. sits on a conveyor belt at the United States Postal Service Merrifield processing and distribution center in Merrifield, Va., Dec. 19, 2018. (Andrew Harrer/Bloomberg via Getty Images/Getty Images)
Separately, the agency said the Thrift Savings Plan (TSP), a separate retirement savings plan similar to the federal 401(k), remains unaffected.
USPS will continue to process employee-sponsored contributions and matching funds to the Thrift Savings Program (TSP), and noted that employees will be able to contribute more through 2026 under the new IRS limits.
Postmaster General David Steiner testified before Congress about the current state of the US Postal Service. (Pool)
In March, Postmaster General David Steiner told a House Oversight subcommittee that the Postal Service could be bankrupt within a year without major changes.
Steiner outlined possible cost-cutting measures, including reducing six-day delivery, raising first-class postage rates from 78 cents to $1 or more and expanding borrowing authority after the USPS reaches its $15 billion debt limit.
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“In order to survive beyond next year, we need to increase our borrowing capacity so we don’t run out of money,” Steiner said in prepared testimony. “Failure to do this could lead to the end of the Postal Service as we know it now.”
