Postal Service Halts Pension Payments Amid Cash Crisis

Financial Crisis Forces Emergency Action

The United States Postal Service has taken the drastic step of suspending employer contributions to worker pension plans, effective Friday, as the agency grapples with what officials describe as an "ongoing, severe financial crisis." The move affects the Federal Employees Retirement System and represents a desperate attempt to preserve cash and maintain basic operations .

USPS will halt $200 million payments made every other week for its employer contributions to the defined benefit portion of the Federal Employees Retirement System . Officials have warned the USPS is on course to run out of cash by around February 2027 , making this suspension a critical lifeline for the agency's immediate survival.

Despite the suspension of employer contributions, current and future retirees will not be immediately impacted . The Postal Service will continue transmitting employees' retirement contributions to the federal Office of Personnel Management, along with Thrift Savings Plan contributions, including employer automatic and matching funds .

Massive Losses Drive Desperate Measures

The pension suspension comes as USPS faces staggering financial losses that have persisted despite revenue growth. USPS's net losses for the 2025 fiscal year totaled $9 billion, even though total operating revenue increased by $916 million or 1.2% . Net losses in fiscal year 2024 were $9.5 billion .

The Postal Service has seen annual volume plummet from about 220 billion pieces in 2006 to about 110 billion today as more people pay bills and communicate online . This dramatic decline in mail volume has fundamentally undermined the agency's traditional business model, forcing it to seek increasingly drastic cost-cutting measures.

Chief Financial Officer Luke Grossmann emphasized 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" .

Stamp Price Hikes on the Horizon

Alongside the pension suspension, USPS is pursuing additional revenue through postage increases. The Postal Service wants to increase postage rates, including raising the price of a First-Class Mail Forever stamp from 78 cents to 82 cents . Postmaster General David Steiner has outlined even more dramatic potential changes, including raising first-class mail prices from 78 cents to $1 or more and reducing six-day delivery .

The Postal Regulatory Commission granted the Postal Service a temporary, multi-year waiver allowing it to redirect billions of dollars in revenue previously earmarked for retiree benefits, providing "some breathing room and flexibility" to execute contingency plans . The waiver lifts restrictions on how USPS may use approximately $2.4 billion of revenue in fiscal 2026, and $3 billion each following year through the end of fiscal 2030 .

A Service Under Threat

Brian Renfroe, president of the National Association of Letter Carriers, acknowledged the temporary suspension is "not ideal" but noted that union members understand the Postal Service's financial challenges . Workers recognize that maintaining basic postal operations takes precedence over immediate pension contributions.

USPS previously deferred payments in 2011 during another financial crisis , suggesting this latest move follows an established playbook for emergency cash conservation. However, the scale of current losses and the projected timeline for running out of funds indicate this crisis may be more severe than previous challenges.

The pension suspension buys USPS time, but the underlying structural problems remain unresolved. Without congressional action to expand borrowing authority or approve more fundamental reforms, the agency faces an uncertain future that could ultimately threaten the universal mail service Americans have relied on for centuries.