The United States Postal Service announced Thursday that it has notified federal budget authorities of its decision to temporarily halt employer contributions to Federal Employees Retirement System pensions in order to maintain payroll operations, vendor payments, and mail delivery services.
This decision by the Postal Board of Governors aims to safeguard cash flow and maintain operational liquidity amid what USPS Chief Financial Officer Luke Grossmann described as the agency’s “ongoing, severe financial crisis” in a message sent to postal workers. Agency leaders have projected that the USPS could exhaust its available funds by approximately February 2027.
Beginning Friday, the suspension of employer pension contributions will take effect, though Grossmann emphasized that current and future retirees will not face immediate consequences.
“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,” he stated. The postal service previously deferred similar payments during a financial emergency in 2011.
While halting pension contributions, the Postal Service will maintain employee retirement deductions sent to the federal Office of Personnel Management, continue Thrift Savings Plan contributions including employer automatic and matching funds, and preserve employer Social Security contributions.
Brian Renfroe, who leads the National Association of Letter Carriers, acknowledged that while the temporary halt on pension payments is “not ideal,” it won’t directly affect his membership, who recognize the postal service’s financial difficulties.
“Given a menu of options, none of which are overall positive, they would certainly prefer the Postal Service making a move like this as opposed to something that immediately impacts them or immediately impacts in a negative way the service that we provide to the American people,” Renfroe explained.
Nearly all career postal employees—99 percent—participate in the Federal Employees Retirement System.
In recent testimony before Congress and in discussions with The Associated Press, Postmaster General David Steiner emphasized that the 250-year-old institution requires lawmakers to remove long-standing borrowing restrictions, enabling the independent agency to access additional funding.
“That will buy us the time to make the fixes we need to make, and we can sail on down the road,” Steiner explained to the AP. The postmaster general has also advocated for additional reforms, including granting the Postal Service the power to increase stamp prices sufficiently to offset operational losses.
The advocacy organization Keep Us Posted, which represents consumers, catalog companies, greeting card manufacturers and other stakeholders, has called on Congress to limit any price increases to annual adjustments. The group also seeks to preserve six-day weekly mail delivery and ensure postal regulators maintain stronger oversight of service modifications.
Mail volume has dramatically declined for the Postal Service, dropping from approximately 220 billion pieces in 2006 to roughly 110 billion pieces currently, as digital communication and online bill payment have become more prevalent.
For fiscal year 2025, USPS recorded net losses of $9 billion, despite total operating revenue growing by $916 million or 1.2%, primarily driven by its Ground Advantage shipping program. The previous fiscal year saw net losses of $9.5 billion.
