Postal Service Stops Pension Contributions to Save Cash

The U.S. Postal Service is looking to save cash as fuel prices and operating expenses have soared.

The agency informed the Office of Personnel Management (OPM) on April 10 it will temporarily suspend its employer’s contributions for the defined benefit portion of the Federal Employees Retirement System (FERS) due to its ongoing, severe financial crisis. The USPS is warning it may run out of cash by February 2027.

“There will not be any immediate detrimental impact to our current or future retirees if normal FERS cost payments are temporarily withheld,” said Postal Service Chief Financial Officer Luke Grossmann. “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. We will continue to transmit to OPM employees’ contributions to FERS and will also continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan. It must be noted that our pension systems remain much better funded than other agencies.”

The Postal Service pays about $200 million every other week to OPM for the FERS annuity. Suspension of payments, effective April 10, will free about $2.5 billion in the current fiscal year.

The Board is only suspending employer payments to the FERS annuity. All other payments — employee contributions to FERS, and employer and employee contributions to TSP and Social Security — will continue.