Photo: PATRICK T. FALLON / AFP / Getty Images
The United States Postal Service has announced it will temporarily stop making employer contributions to the Federal Employees Retirement System (FERS) starting Friday (April 10), as the agency faces a severe financial crisis and warns of a potential cash shortage within the next year.
According to an official statement from Postal Service Chief Financial Officer Luke Grossmann, the decision aims to conserve cash and preserve liquidity so the USPS can continue making payroll, paying suppliers, and ensuring mail delivery. Grossmann emphasized there will be "no immediate detrimental impact to our current or future retirees if normal FERS cost payments are temporarily withheld," stating that "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." The agency plans to keep transmitting employees' FERS contributions and maintain employer contributions to the Thrift Savings Plan and Social Security. The suspension, effective immediately, is expected to free up about $2.5 billion in the current fiscal year, as detailed in the USPS's cash conservation plan.
Nearly all USPS career employees are covered by FERS, and the agency pays roughly $200 million every two weeks for these annuities. The National Association of Letter Carriers president Brian Renfroe called the move "not ideal" but noted it does not immediately impact workers: "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."
To address the crisis, USPS has also requested approval to raise the price of a First-Class Mail Forever stamp from seventy-eight cents to eighty-two cents and has filed for other postage increases. This comes as the agency's mail volume has dropped from about 220 billion pieces in 2006 to 110 billion today, with net losses totaling $9 billion in fiscal year 2025, despite modest revenue growth.
Meanwhile, the Postal Regulatory Commission has granted USPS a temporary waiver to redirect billions previously set aside for retiree benefits, providing additional flexibility to manage the crisis. Postmaster General David Steiner told lawmakers the agency needs its $15 billion borrowing cap raised to $34.5 billion to avoid running out of cash by February 2027. He also called for changes in pension funding and more authority to adjust rates to cover losses.