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The United States Postal Service will suspend employer pension contributions for employees starting Friday, citing a looming cash shortage, the agency announced Thursday.
The move, which affects the Federal Employees Retirement System (FERS), comes just weeks after the Postal Service warned Congress that it could run out of cash within a year without significant reforms, including changes to pension funding and stamp prices.
USPS emphasized that the pause will have no immediate impact on current or future retirees.
“There will be no immediate adverse impact to our current or future retirees if normal FERS fees are temporarily withheld,” said Luke Grossmann, the Postal Service’s chief financial officer.
POST SERVICE SAYS CASH COULD RUN OUT WITHIN A YEAR WITHOUT CHANGES
A United States Postal Service employee delivers packages on Cyber Monday in New York, December 1, 2025. (Bess Adler/Bloomberg via Getty Images/Getty Images)
USPS has previously reported mounting losses totaling $118 billion since 2007, when volumes of its most profitable product, first-class mail, fell to the lowest level since the late 1960s.
Financial pressures have been further exacerbated by global tariffs, high inflation and recent spikes in gasoline prices, along with increasing competition from private carriers like Amazon, which now delivers many of its own packages.
USPS said it typically sends about $200 million every two weeks to the Office of Personnel Management (OPM), which oversees federal pension accounts, to cover pension costs.
By suspending payments, the agency expects to free up about $2.5 billion in the current fiscal year.
Although the agency has suspended its employer contributions, it said it will continue to transfer employee payroll deductions to retirement accounts.
USPS MAY DELAY SERVICE IN CERTAIN AREAS AS IT TRYS TO SAVE COSTS
A package from Amazon Inc. lies on a conveyor belt at the United States Postal Service Merrifield processing and distribution center in Merrifield, Virginia, December 19, 2018. (Andrew Harrer/Bloomberg via Getty Images/Getty Images)
In addition, the agency said its Thrift Savings Plan (TSP), a separate retirement savings program similar to a government 401(k) program, will remain unaffected.
USPS will continue to process employee-funded contributions and matching funds in the Thrift Savings Plan (TSP), noting that employees will be able to contribute more in 2026 under the new IRS limits.
Postmaster General David Steiner testified before Congress about the current state of the US Postal Service. (Swimming pool)
In March, Postmaster General David Steiner told a House Oversight subcommittee that without major changes, the Postal Service could run out of cash within a year.
Steiner outlined possible cost-saving steps, including shortening six-day delivery, raising first-class mail prices from 78 cents to $1 or more and expanding borrowing authority after USPS hit its $15 billion debt ceiling.
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“To survive next year, we must increase our borrowing capacity so we don’t run out of cash,” Steiner said in prepared testimony. “Failure to do so could lead to the end of the postal service as we know it.”
