The US Postal Service, which has been facing mounting financial pressure in recent months, on Thursday said it had informed federal budget officials that it will be suspending some payments to a government-wide retirement fund.
The suspension of to Federal Employees Retirement System annuities will help it keep making payroll, paying suppliers and delivering the mail, the USPS said.
The Postal Service wants to increase postage prices by 5% starting 12 July, but the plan needs to be approved by the Postal Regulatory Commission, an independent agency that oversees the USPS. If approved, the price of a First-Class Mail Forever stamp will go up from 78 cents to 82 cents. USPS filed a notice with the regulator on Friday.
It would be the eighth stamp price hike since 2021, an increase of about 34% over that time, according to the Postal Regulatory Commission.
Step taken due to severe crisis: Official
The step taken by the Postal Board of Governors to forgo the pension payments is meant to preserve cash and liquidity due to the Postal Service’s “ongoing, severe financial crisis,” Postal Service Chief Financial Officer Luke Grossmann said in an internal message to USPS employees, The Associated Press reported.
Officials have warned that the is on course to run out of cash by around February 2027.
Despite the suspension of employer contributions, effective Friday, current and future retirees will not be immediately impacted, Grossman said.
“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 said in the statement.
USPS has previously relied on measures like this to conserve cash. In 2011, the Postal Service suspended its employer contributions to FERS to conserve as much cash as possible because it was going through another acute period of financial stress.
The Postal Service said it 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, and will also maintain its employer contributions to Social Security.
Earlier Thursday, the Postal Regulatory Commission (PRC) passed a separate waiver that would lift certain pension funding requirements for the agency, potentially freeing up to $15 billion through 2030 to support the postal service.
Could USPS run out of cash?
The move comes a month after Postmaster General David Steiner told a congressional committee that USPS could run out of in less than a year if significant reforms were not taken.
Steiner further said that the 250-year-old service needs to have a decades-old $15 billion cap on borrowing raised to $34.5 billion so the independent agency can access more cash.
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.
USPS’s net losses for the 2025 fiscal year totaled $9 billion, even though total operating revenue increased by $916 million or 1.2%, due largely to its Ground Advantage shipping service. Net losses in fiscal year 2024 were $9.5 billion.
