The United States Postal Service announced on Thursday that it will halt contributions to its employees’ retirement pension plan as the agency works to conserve cash and manage its dwindling finances.
Postal Service Chief Financial Officer Luke Grossmann said the agency will suspend payments to the Federal Employees Retirement System, the pension plan that 99% of career USPS employees use.
“There will not be any immediate detrimental impact to our current or future retirees if normal FERS cost payments are temporarily withheld,” Grossmann 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.”
The postal service’s financial struggles have come to a head this year, with Postmaster General David Steiner warning that the service will run out of money by the end of 2026 unless the federal government makes substantial regulatory reforms to the agency.
The move to suspend USPS’s bi-weekly $200 million payments to the Office of Personnel Management for FERS is the agency’s latest drastic cost-saving measure as it manages an existential financial crisis. USPS says the move is expected to save the agency about $2.5 billion this fiscal year.
Grossman said the agency will continue to withhold employees’ contributions to FERS, sending them directly to OPM. The move will have no effect on employees’ contributions or the employer’s automatic and matching contributions to the Thrift Savings Plan, which is similar to a 401(k).
“It must be noted that our pension systems remain much better funded than other agencies,” Grossman said.
Despite Thursday’s cost-saving effort, a USPS spokesperson told the Washington Examiner that the move provides only a “small financial cushion.”
“To avoid a worst-case scenario of illiquidity and inability to fund operations, we are urging Congress to act this year to expand the Postal Service borrowing authority and enact other public policy changes,” the spokesperson said. “Suspension of the employer portion of USPS FERS payments will not affect the benefits of future or current retirees.”
ANTHROPIC LOSES BID TO BLOCK PENTAGON’S ‘SUPPLY CHAIN RISK’ DESIGNATION
The announcement comes on the heels of Steiner’s testimony last month before the House Oversight Subcommittee on Government Operations, during which he pleaded with Congress to raise the $15 billion borrowing cap it instated in 1992. Steiner also testified that he was looking to increase stamp prices and brought up pension restructuring.
In late March, the agency also implemented an 8% fuel surcharge on packages to offset rising energy prices due to the Iran war.
