The USPS is suspending contributions to employee pensions as it warns of a ‘pending liquidity crisis’
USPS
- The USPS is temporarily suspending payments to an employee pension plan, it said on Thursday.
- The move is set to free up $2.5 billion this fiscal year, the postal service said.
- USPS is facing liquidity problems and warned that it could run out of cash in early 2027.
America’s postal service is temporarily halting payments to its employees’ pensions to free up cash, citing fast-approaching financial troubles.
The payment suspension to the Federal Employees Retirement System pension plan is set to take effect on Friday, the US Postal Service said in a document with frequently asked questions and answers. The FAQ attributed the pause in pension payments to “a pending liquidity crisis in which the postal service could run out of cash as early as February 2027.”
USPS chief financial officer Luke Grossmann said that the suspension would not cause “any immediate detrimental impact” to current employees or retirees.
“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,” Grossmann said in a statement.
The pause is the latest sign of trouble for USPS. Last fiscal year, the postal service lost $9 billion.
In a congressional hearing last month, Postmaster General David Steiner said the financial situation puts USPS at a “critical juncture.” Without action, Steiner said, USPS might not be able to deliver mail starting in early 2027.
By suspending pension payments, USPS said it would save $2.5 billion in the current fiscal year. USPS pays about $200 million every other week to fund the pensions. Contributions to employees’ Thrift Savings Plans, a separate savings option for federal employees, won’t be affected by the pause, USPS said.
The pension payment pause isn’t a permanent solution to the postal service’s financial problems, USPS said. The agency has cut costs and pursued new revenue, but said it also needs Congress to increase its funding.
“Legislative action is desperately needed to return the Postal Service to profitability,” USPS said in the FAQ.
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