The U.S. Postal Service (USPS) has suspended its contributions to the Federal Employees Retirement System (FERS), a pension plan for its workers, as it faces mounting financial losses that put it at risk of running out of funds.
Key Takeaways
The U.S. Postal Service (USPS) has suspended its contributions to the Federal Employees Retirement System (FERS), citing a severe cash crisis that threatens its operations.
- USPS halts $200 million biweekly payments to FERS, saving $2.5 billion annually
- Agency warns it could run out of cash within 12 months without reforms
- Proposed changes include raising stamp prices and reducing delivery days
- USPS reports $9 billion loss in 2025 and $118 billion since 2007
According to CBS News, USPS spokesman David Walton stated, 'The United States Postal Service is heading toward a cash crisis.' The agency contributes about $400 million a month to its employee pension plan and will continue to send worker contributions to the retirement plan. However, suspending payments to FERS will free up about $2.5 billion in the current fiscal year.
USPS Chief Financial Officer Luke Grossmann said in a statement that the risk of 'insufficient liquidity for postal operations dramatically outweighs any longer-term risk to the pension funds from not making the currently due payments.' The agency has been struggling with high costs and dwindling mail volume, culminating in a $9 billion loss in 2025.
Postmaster General David Steiner warned Congress last month that without reforms, the USPS could run out of cash within 12 months. Proposed changes include raising the cost of a first-class stamp to 95 cents or reducing delivery from six days per week to five or fewer. The agency also plans to temporarily hike postage prices by an 8% surcharge on some postage prices beginning April 26, with those added costs remaining in place through Jan. 17, 2027.
According to Reuters, the USPS has reported net losses of $118 billion since 2007 as first-class mail volume falls to its lowest level since the late 1960s. The agency reported a quarterly loss of $1.25 billion in February. The temporary halt in contributions to FERS comes after USPS estimated it will save $2.5 billion with the action through September 30.
Despite being a federal entity, the Postal Service does not receive tax dollars and instead relies on the sale of its products and services to fund operations. A sharp decline in mail volume has contributed to the financial crunch, with the agency seeing a decrease of more than 104 billion pieces of mail per year since 2006.
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