USPS to suspend pension contributions and seek stamp price hike

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The U.S. Postal Service said it has informed federal budget officials that it will temporarily suspend employer contributions to Federal Employees Retirement System annuities, beginning Friday, in a bid to preserve cash as the agency faces what it called an “ongoing, severe financial crisis.” Postal Service Chief Financial Officer Luke Grossmann said the Postal Board of Governors made the decision to forgo pension payments so USPS can keep making payroll, paying suppliers and delivering the mail.

In a statement, Grossmann said USPS expects insufficient liquidity could put the agency on a path to running out of cash by around February 2027. He said the decision is intended to address the “risk to the Postal Service and the American public from insufficient liquidity for postal operations” and described the step as outweighing “any longer-term risk to the pension funds from not making the currently due payments.”

Grossmann said the suspension would not immediately affect retirement benefits for current and future retirees. USPS has said it will continue transmitting employees’ retirement contributions to the federal Office of Personnel Management and will also continue Thrift Savings Plan contributions, including employer automatic and matching funds.

USPS also said it will maintain its employer contributions to Social Security while the annuity payments are paused. The service said 99% of its career employees are covered by the Federal Employees Retirement System.

Alongside the pension-contribution change, USPS asked regulators to approve higher postage rates, filings made with the Postal Regulatory Commission. USPS said it requested increases including raising the price of a First-Class Mail “Forever” stamp from 78 cents to 82 cents, with other changes affecting postcards and international letters as well.

The Postal Regulatory Commission granted USPS a temporary, multi-year waiver on Thursday that allows the postal service to redirect billions of dollars in revenue previously earmarked for retiree benefits. Regulators described the waiver as providing “some breathing room and flexibility” as USPS executes contingency plans, according to the description of the decision in the report.

Postal leaders have previously told lawmakers and USPS employees that changes to borrowing limits and other authorities are needed. Postmaster General David Steiner told The Associated Press and later a congressional committee that USPS needs its decades-old $15 billion cap on borrowing raised to $34.5 billion so it can access more cash.

Steiner has also called for other changes, including greater flexibility in how retirement funds are invested, changes to pension obligation methodology and authority for USPS to raise postage prices high enough to cover losses, the report said. Brian Renfroe, president of the National Association of Letter Carriers, said the annuity suspension is “not ideal,” but he said it does not immediately impact letter carriers and reflects how union members view the Postal Service’s broader financial challenges.

Renfroe said USPS’s decision is a “direct result of continued inaction by Congress” to address what he described as “legislative restraints” on the Postal Service. An advocacy group called Keep Us Posted, which represents consumers and some businesses that publish and distribute greeting cards and other products, urged Congress to ensure any rate increases would be limited to once a year, while also urging that six-day-a-week mail service remains in place and that regulators have greater control over service changes.

USPS said the proposed price increases it requested Thursday would still keep rates among the most affordable in the world and that the agency relies mostly on postage sales, products and services to finance its operations. The Postal Service has also reported that its annual mail volume has fallen from about 220 billion pieces in 2006 to about 110 billion today, as more bills and communication move online.

USPS reported net losses of $9 billion for fiscal year 2025, even as total operating revenue increased by $916 million, or 1.2%, according to the report. The agency reported net losses of $9.5 billion for fiscal year 2024.