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By Jordan King and Matthew Robinson
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The United States Postal Service has announced it will temporarily suspend contributions to the Federal Employees Retirement System due to its "severe financial crisis."
The suspension will take effect from Friday and will free up around $2.5 billion in the current fiscal year, the USPS said.
Why It Matters
The USPS is a critical component of the U.S. logistics and communications infrastructure, delivering mail and packages to millions of households and businesses. Financial instability within the agency can have ripple effects across industries, including e-commerce, shipping and rural delivery services.
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The decision to pause pension contributions raises concerns among employees and labor advocates about retirement security and workplace benefits. It also signals the extent of USPS’s financial strain.
What To Know
USPS said in its Thursday announcement that it is taking steps “to conserve cash and preserve liquidity due to its ongoing, severe financial crisis.”
Postal Service Chief Financial Officer Luke Grossmann said the move was temporary and said, “There would be no immediate detrimental impact to our current or future retirees.”
He argued 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.”
Grossmann also said that the USPS would “continue to transmit Office of Personnel Management to Federal Employees Retirement System and will also continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan.”
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Among the financial issues facing the USPS is the surge in oil prices amid the war with Iran, which has increased its transportation costs.
The U.S. Postal Service previously announced that it has filed a notice with the Postal Regulatory Commission (PRC) for a time‑limited price change to better align its transportation costs with market conditions. The USPS said the adjustment would provide needed flexibility to ensure its actual costs of doing business are covered, as required by Congress.
The planned change is an 8 percent increase affecting Priority Mail Express, Priority Mail, USPS Ground Advantage and Parcel Select. First‑Class Mail and other products would not be affected. If approved by the PRC, the increase would take effect April 26 and remain in place until January 17, 2027.
"Transportation costs have been increasing, and our competitors have reacted with a number of surcharges," the Postal Service said, adding that the increase is less than one‑third of what competitors charge for fuel alone.
What People Are Saying
The USPS said: “The Postal Service has informed the Office of Personnel Management (OPM) of its intention to temporarily suspend its employer’s contributions for the defined benefit portion of the Federal Employees Retirement System (FERS) to conserve cash and preserve liquidity due to its ongoing, severe financial crisis.”
Postal Service Chief Financial Officer Luke Grossmann said: “It must be noted that our pension systems remain much better funded than other agencies.”
What Happens Next
USPS is expected to continue implementing cost-saving measures while seeking longer-term financial stability through operational changes and potential policy adjustments.
The agency has not specified how long the pause on pension contributions will remain in place, but future updates are likely as USPS evaluates its financial position and as broader reform efforts continue.
Update 4/9/26, 11:43 a.m. ET: This article was updated with additional information.
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