The U.S. Postal Service, which has faced mounting financial pressure in recent months, said Thursday it has informed federal budget officials it will suspend some payments to a governmentwide pension fund.
Suspending employer contributions to the Federal Employees Retirement System will help it maintain payroll, pay contractors and deliver mail, the USPS said.
Additionally, the Postal Service wants to raise the price of postage by 5% starting July 12, but the plan must be approved by the Postal Regulatory Commission, the independent agency that oversees the USPS. If approved, the price of the First Class Mail Forever stamp will increase from 78 cents to 82 cents. The USPS filed the notice with the regulator on Friday.
According to the Postal Regulatory Commission, this would be the eighth increase in stamp prices since 2021, an increase of about 34% over that time.
Step taken due to serious crisis: Official
The move by the Postal Board of Governors to forgo pension payments is intended 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 memo to USPS employees, The Associated Press reported.
Officials have warned that the USPS is on track to run out of cash around February 2027.
Despite the suspension of employer contributions, effective Friday, current and future retirees will not be immediately affected, Grossman said.
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“The risk to the Postal Service and the American public from insufficient liquidity for postal operations dramatically outweighs the long-term risk to pension funds from not making payments currently due,” he said in a statement.
The USPS has previously relied on measures like this to conserve cash. The Postal Service suspended employer contributions to FERS in 2011 to conserve as much cash as possible as it went through another acute period of financial stress.
The Postal Service said it will continue to forward employee pension contributions to the federal Office of Personnel Management along with savings plan contributions, including employer automatic and matching funds, and will also maintain employer contributions to Social Security.
Earlier on Thursday, the PRC approved a separate waiver that would waive certain pension funding requirements for the agency, potentially freeing up to $15 billion by 2030 to provide postal services.
Could the USPS be running out of cash?
The move comes a month after Postmaster General David Steiner told a congressional committee that the USPS could run out of cash in less than a year unless significant reforms are enacted.
Steiner went on to say that the 250-year-old service needs to have its decades-old $15 billion borrowing cap raised to $34.5 billion to give the independent agency access to more cash.
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The Postal Service has seen an annual drop from about 220 billion pieces in 2006 to about 110 billion today as more people pay bills and communicate online.
USPS net losses for fiscal 2025 were $9 billion, even as total operating revenue rose $916 million, or 1.2%, primarily due to the Ground Advantage shipping service. Net losses in fiscal 2024 were $9.5 billion.
