The U.S. Postal Service said Thursday that it will temporarily suspend its contributions to an employee pension plan to conserve cash as it faces a severe financial crisis. The postal service also announced that it will raise the price of a first-class forever stamp from 78 cents to 82 cents starting July 12.
The postal service has struggled for years, posting heavy losses as it faced a sharp decline in mail volumes. Its leaders have sought to raise prices and cut costs as part of a 10-year reorganization meant to achieve financial sustainability, but they have complained that the agency faces regulatory restrictions on its business practices, a $15 billion borrowing limit, sizable employee retirement costs and legal requirements (and public demands) that it still provide its services across the country six days a week.
The reorganization efforts have failed to improve USPS’s financial outlook. USPS posted a $9 billion loss in fiscal year 2025, down only slightly from a $9.5 billion loss the year before. Postmaster General David Steiner warned Congress last month that, under the status quo, the postal service was on pace to run out of cash — and be unable to deliver the mail — in less than a year.
“If you want the same level of services that we have today—six-day-a-week delivery and 33,000 plus post offices, we can do that, and we are glad to do that,” Steiner testified before a House Oversight hearing on March 17. “But someone has to pay for it, and the only options are postal ratepayers or taxpayers.”
Steiner said at the time that he wants to raise the cost of a first-class stamp from 78 cents to between 90 cents and 95 cents to help address its financial crunch. USPS also said last month that it will enact a temporary 8% surcharge on some postage prices for packages from April 26 through January 17, 2027, to cover higher transportation costs. The mail agency is also calling on Congress to increase its borrowing authority to $34.5 billion.
USPS said Thursday that it had informed the federal Office of Personnel Management that it intends to suspend its contributions to the Federal Employees Retirement System (FERS) starting tomorrow. The postal service pays about $200 million every other week for the pension plan. It said that the temporary freeze will free up about $2.5 billion in funding for the current fiscal year and that it would still send employees’ contributions to the pension plan along with the usual contributions to the Thrift Savings Plan, another retirement program. USPS also temporarily deferred FERS payments during a cash crunch in 2011.
“There will not be any immediate detrimental impact to our current or future retirees if normal FERS cost payments are temporarily withheld,” Postal Service Chief Financial Officer Luke Grossmann said in a statement. “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.”
Grossman added: “It must be noted that our pension systems remain much better funded than other agencies.”
In all, the postponed retirement contributions could free up $15 billion or so if they continue through the end of fiscal year 2030. The Postal Regulatory Commission, which granted a waiver to allow the suspension of payments, said the move “should allow the Postal Service to avoid a liquidity crisis over the next few years” but urged the postal service and Congress to use the “breathing room” being provided “as an opportunity to work toward meaningful and lasting change.”
While lawmakers have stepped in before to deliver some financial relief for the postal service — including a 2022 reform that eliminated a requirement to pre-fund retiree health benefits, helping to save an estimated total of $107 billion — congressional Republicans reportedly have little appetite for rescuing the postal service now. House Oversight and Government Reform Chair James Comer reportedly offered Politico a blunt message for USPS: “No more bailouts,” he said. “You’re going to have to figure it out. You’re going to have to stop the bleeding.”