The U.S. Postal Service (USPS) announced that it has informed federal budget officials of its decision to temporarily suspend its employer contributions to the Federal Employees Retirement System (FERS) annuities. This measure aims to preserve cash flow for payroll, supplier payments, and ongoing mail delivery amid what officials describe as a “severe financial crisis.” Chief Financial Officer Luke Grossmann highlighted the urgency of the situation, warning that the Postal Service is on track to exhaust its cash reserves by around February 2027.
Effective immediately, this suspension will not impact current and future retirees right away. Grossmann emphasized that the immediate risks posed by insufficient liquidity to maintain postal operations outweighed any long-term concerns regarding pension fund stability. Historically, the USPS has previously deferred such payments during prior financial challenges, including a similar situation in 2011.
In a separate but related matter, the Postal Regulatory Commission granted USPS a temporary multi-year waiver that allows the organization to redirect billions of dollars in revenue that had been earmarked for retiree benefits. This flexibility is intended to provide some “breathing room” as the Postal Service navigates its financial landscape.
The USPS also filed a proposal with regulators to increase postage rates, which includes raising the price of a First-Class Mail Forever stamp from 78 cents to 82 cents. The regulatory approval is still pending. While acknowledging that raising prices is not a favorable option, Brian Renfroe, president of the National Association of Letter Carriers, mentioned that his members understand the financial difficulties the Postal Service faces. He noted that in a situation with limited options, they would prefer this temporary suspension over choices that would have more immediate adverse effects on their work or the quality of service provided to the public.
Currently, 99% of career USPS employees are covered under the FERS. The organization will continue to remit employees’ retirement contributions to the Office of Personnel Management and uphold Thrift Savings Plan contributions, including both employer automatic and matching funds. Additionally, the USPS will maintain contributions to Social Security.
Postal Service Postmaster General David Steiner has previously indicated that the agency requires an increase in its borrowing cap from $15 billion to $34.5 billion to have better access to cash flow. He has also called for more flexibility in retirement fund investments and increased authority to adjust postage prices sufficiently to cover losses.
Consumer advocacy group Keep Us Posted has urged Congress to limit any rate increases to once a year and to ensure that the USPS maintains six-day-a-week mail delivery, also calling for greater regulation of service changes.
The financial outlook for the USPS is sobering, as it has experienced a significant decline in annual mail volume—from approximately 220 billion pieces in 2006 to about 110 billion today. Despite a slight increase in total operating revenue of $916 million for the fiscal year 2025, the Postal Service reported net losses totaling $9 billion, following a $9.5 billion loss in fiscal year 2024. The organization’s operational reliance on the sale of postage, products, and services underscores the urgency of addressing these financial challenges.
