USPS Suspends Employee Pension Contributions Amid “Severe Financial Crisis,” Projects Cash Exhaustion by February 2027

The United States Postal Service announced on April 9, 2026, that it is temporarily suspending its employer contributions to the Federal Employees Retirement System (FERS) — a pension plan covering 99 percent of career USPS employees and other federal civil servants — citing an "ongoing, severe financial crisis" and the risk of running out of operational cash within months.

USPS pays approximately $200 million every two weeks to the Office of Personnel Management for the FERS defined benefit annuity. By suspending those payments, the agency expects to preserve approximately $2.5 billion through the end of fiscal year 2026 (September 30). USPS Chief Financial Officer Luke Grossmann stated that "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." The agency confirmed that employee payroll contributions to FERS, employer automatic and matching contributions to the Thrift Savings Plan, and all employee TSP contributions will continue unaffected.

Postmaster General David Steiner has warned Congress that without significant legislative and regulatory reforms, USPS could entirely exhaust its cash reserves as early as February 2027. The agency posted a $9 billion net loss in fiscal year 2025, and has run billion-dollar annual deficits nearly every year since 2007 as first-class mail volume has fallen to its lowest level since the late 1960s. The FERS fund is currently approximately 76 percent funded as of fiscal year 2024.

Separately, the Postal Regulatory Commission granted USPS a temporary multi-year waiver allowing it to redirect approximately $2.4 billion in fiscal 2026 — and $3 billion each subsequent year through fiscal 2030 — in revenue normally reserved for retiree benefits. USPS has also proposed raising the price of a First-Class Mail Forever stamp from 78 cents to 82 cents, pending regulatory approval, and has implemented an 8 percent surcharge on some postage categories beginning April 26 to offset Iran war-related fuel cost increases.

USPS requested Congress raise its currently maxed-out $15 billion Treasury borrowing limit to $34.5 billion. The suspension of FERS contributions is the same emergency measure USPS previously deployed in June 2011 during the last acute financial crisis. The agency is the only national logistics network with a universal service mandate, delivering to every residential and business address in the United States — making its operational continuity a matter of national infrastructure resilience.