The U.S. Postal Service (USPS) has announced a temporary suspension of contributions to workers’ retirement plans, a decision driven by the agency’s persistent financial struggles. In a communication to the Office of Personnel Management (OPM), USPS officials explained that the Board of Governors opted for this suspension in an effort to conserve cash and maintain financial liquidity amidst an ongoing, severe financial crisis.
Typically, the Postal Service contributes approximately $200 million every two weeks to the Federal Employees Retirement System (FERS). The suspension, effective April 10, is expected to free up around $2.5 billion in the current fiscal year, as stated by the agency. While employee contributions to the retirement system will remain intact, USPS affirmed that it will continue to make employer automatic and matching contributions to the Thrift Savings Plan, alongside other mandatory payments such as those to Social Security.
USPS Chief Financial Officer Luke Grossmann reassured current and future retirees that there would be “any immediate detrimental impact” from this suspension. He emphasized that potential risks to pension funds from halting these payments are far outweighed by the immediate risks posed by insufficient liquidity for postal operations.
The Postal Service also cautioned that this action should not be viewed as a long-term solution to its financial issues. In a statement, USPS noted that legislative action is urgently needed to restore the organization to profitability. Newly appointed Postmaster General David Steiner has voiced concern over the agency’s financial future, projecting that USPS could run out of cash by 2027 without additional congressional support, including an increase in its statutory debt limit from $15 billion to $34.5 billion.
The move to suspend retirement payments follows a recent ruling by the Postal Regulatory Commission, which granted USPS a multi-year waiver allowing the agency to take necessary actions to navigate its “deteriorating financial condition.” Since 2007, the Postal Service has reported net losses totaling $118 billion, attributed primarily to a significant decrease in first-class mail volumes, its most profitable offering, which have plummeted to levels not seen since the late 1960s. In February, USPS reported a quarterly loss of $1.25 billion.
Additionally, in a bid to mitigate rising operational costs, USPS recently secured approval for an 8% price increase on priority mail and package deliveries, set to go into effect on April 26 and remain until January 17, 2027. Postmaster General Steiner has also suggested that raising the price of first-class mail stamps to $1 or more could further bolster revenue and assist in reducing financial losses.
