USPS told the Office of Personnel Management on Thursday that it will hold off on paying its employer contributions to the Federal Employees Retirement System, a move that gives the mailing giant another cushion as it confronts a worsening cash squeeze. The Postal Service said it will keep sending workers’ own FERS contributions and will continue all regularly scheduled payments to the Thrift Savings Plan.
The pause affects only the Postal Service’s share of FERS, not the money taken from employees, and the agency said it expects the step to free up about $2.5 billion this fiscal year to help cover other costs. Every other week, USPS sends OPM about $200 million for the FERS annuity, so even a temporary stop marks a meaningful shift in how the agency is trying to stay liquid.
Postmaster General David Steiner has been signaling for weeks that the service has little room left. He told members of the House Oversight and Government Reform Committee last month that USPS was set to run out of cash in less than 12 months if it paid all its bills on time. On March 17, he told the government operations subcommittee that the Postal Service would be unable to deliver the mail in less than a year if it kept the status quo. Steiner also warned lawmakers that, without help from Congress, USPS may have to consider cutting delivery days or closing post offices.
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The decision lands just ahead of another price increase planned for July 12, when USPS wants to raise the cost of a first-class forever stamp from 78 cents to 82 cents. That change still needs approval from the regulator, and the agency has already been limited to a single price hike for mail each year through September 2030. Since 2020, USPS has been raising mail prices nearly every January and July, a pattern that has drawn more attention as the service leans harder on postage revenue.
USPS has reached for this kind of cash conservation before. It suspended its employer contributions to FERS in June 2011, stayed out for several months, then resumed biweekly payments and paid back what it owed OPM. The agency has posted billion-dollar net losses almost every year since 2007, even after lawmakers passed reform legislation in April 2022 that saved USPS $107 billion in total costs and after legislation signed four years ago wiped away billions of dollars of its debt while requiring six-day delivery for mail and packages.
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In a statement provided to lawmakers, Luke Grossmann said the risk from insufficient liquidity for postal operations “dramatically outweighs any longer-term risk to the pension funds from not making the currently due payments.” He also said the move would have an “immediate detrimental impact to our current or future retirees,” underscoring the tradeoff at the center of the decision. For now, the answer to whether USPS can keep delivering on time is the same one Steiner has been giving Congress: only by slowing the drain on cash, even if that means delaying retirement contributions that are supposed to arrive on schedule.
