The U.S. Postal Service is cutting payments into workers’ pension plans and seeking to raise prices for customers this season.
The USPS has temporarily suspended its employee contributions for the defined benefit portion of the Federal Employees Retirement System, effective April 10, the agency told the Office of Personnel Management, the USPS said in an April 9 release.
The agency is also requesting price increases on various postage types, which would be effective July 12, pending approval from the Postal Regulatory Commission, according to an April 9 release.
The moves seek to save money and maintain effective services to the public as the USPS deals with a severe financial crisis, the agency said.
“In the midst of the severe financial crisis facing the Postal Service and continued rising operational costs, the Postal Service is using all available tools, including available regulatory pricing authority, to ensure we can continue to fulfill our universal service obligation and serve the American public. The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. Notwithstanding the adjustment, the Postal Service’s mailing prices remain among the most affordable in the world,” the USPS said in the April 9 price increase release.
“USPS’s retirement costs are significant, totaling $10 billion in 2023 alone,” the Postal Service said.
The American Postal Workers Union is hosting a livestream about recent announcements at 7 p.m. ET April 14.
“While the USPS is certainly facing financial challenges, the APWU has been warning management and the public about them for decades. There are real, common-sense solutions available that APWU President Smith will share…” the union said in a release.
The union said workers should not worry about the temporary suspension because their pensions are protected.
“The APWU is aware of the Postal Service’s actions announced this morning related to temporarily suspending USPS contributions to the Federal Employees Retirement System (FERS). APWU members should rest assured that this will have no immediate impact on any current or future retiree. Your benefits are earned and guaranteed by law, regardless of how they are funded,” the statement said.
Here’s what to know about retirement fund cuts at the U.S. Postal Service.
Is the USPS cutting retirement fund payments?
Yes, the U.S. Postal Service is temporarily suspending employer contributions to the defined benefit portion of the Federal Employees Retirement System, the agency notified the Office of Personnel Management, according to the release.
“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 in the release. “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.”
When do the cuts take effect?
The temporary suspension is effective as of April 10, per the USPS.
Why is the USPS cutting retirement fund payments?
The suspension will free up about $2.5 billion in the current fiscal year to conserve cash and preserve liquidity as the USPS faces a severe financial crisis, the agency said in the release.
How many postal workers are there?
The USPS had about 531,000 employees in 2025, according to the USPS website. The USPS said about 700,000 retirees depend on pensions.
Will the Postal Service raise rates?
The USPS is seeking to increase postage rates, the agency proposed to the Postal Regulatory Commission. The new rates would take effect July 12, pending approval from the commission.
Here are the proposed rate increases:
Contact Jenna Prestininzi: jprestininzi@freepress.com.
This article originally appeared on Detroit Free Press: Postal Service suspends pension contributions amid financial strain
Reporting by Jenna Prestininzi, Detroit Free Press / Detroit Free Press
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