USPS Proposes Price Hikes, Retirement Delays to Avert Financial Crisis

The U.S. Postal Service announced Thursday it will temporarily suspend its employer payments for the Federal Employees Retirement System (FERS), effective Friday, to conserve cash amid what it described as a severe financial crisis. The agency told the White House Office of Personnel Management that it will stop making $200 million payments every other week for the defined benefit portion of FERS.

By pausing those contributions, USPS expects to free up about $2.5 billion this fiscal year to cover other costs. USPS Chief Financial Officer Luke Grossmann said the move was necessary: "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 Postal Service also wants to increase postage rates, including raising the price of a First-Class Mail Forever stamp from 78 cents to 82 cents. That increase, proposed for July 12, still requires approval from the Postal Regulatory Commission. Postmaster General David Steiner has signaled the agency may ultimately need to go further: he told Congress last month that hiking first-class mail stamp prices to 95 cents or $1 or more would provide added revenue and help cut losses.

Earlier this week, USPS won approval from the Postal Regulatory Commission for a temporary 8% price hike for Priority Mail and package deliveries, effective April 26, to deal with rising transportation and fuel costs.

USPS has reported net losses of $118 billion since 2007 as first-class mail, its most profitable product, has fallen to its lowest volume since the late 1960s. The agency lost $9 billion in fiscal year 2025 and $1.3 billion in Q1 of fiscal year 2026 alone, with its cash runway estimated to run out around February 2027 without congressional intervention.

Steiner has also asked Congress to raise the agency's decades-old $15 billion borrowing cap to $34.5 billion. In testimony before a congressional committee last month, he argued the liquidity boost would give the agency room to implement structural reforms. "That will buy us the time to make the fixes we need to make, and we can sail on down the road," he told the Associated Press.

USPS said it will continue transmitting employees' own retirement contributions to OPM and will also keep up employer automatic and matching contributions to the Thrift Savings Plan. The agency noted it deferred FERS payments once before, in 2011, during another period of acute financial stress.

The suspension drew sharp criticism from postal labor. One union official said the pause was the "direct result of continued inaction by Congress" to fix the legislative restraints placed on the Postal Service.

USPS has received major financial relief from Congress before. Lawmakers passed long-awaited reform legislation in April 2022 that saved the agency $107 billion in total costs, including eliminating $57 billion in past-due payments to cover health benefits for postal retirees. USPS also received $10 billion in pandemic relief funds after warning it was on the verge of running out of cash during the COVID-19 crisis. Whether Congress will act again before the February 2027 deadline remains the central question facing the 250-year-old institution.

Final formatted response:

The U.S. Postal Service announced Thursday it will temporarily suspend its employer payments for the Federal Employees Retirement System (FERS), effective Friday, to conserve cash amid what it described as a severe financial crisis. The agency told the White House Office of Personnel Management that it will stop making $200 million payments every other week for the defined benefit portion of FERS.

By pausing those contributions, USPS expects to free up about $2.5 billion this fiscal year to cover other costs. USPS Chief Financial Officer Luke Grossmann defended the decision directly: "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 Postal Service also filed to increase postage rates, including raising the price of a First-Class Mail Forever stamp from 78 cents to 82 cents. That increase, proposed for July 12, still requires approval from the Postal Regulatory Commission. Postmaster General David Steiner has signaled the agency may ultimately need to go further: he told Congress last month that hiking first-class mail stamp prices to 95 cents or $1 or more would provide added revenue and help cut losses. The cost of a Forever stamp has already risen from 55 cents in 2020 to 78 cents today.

Earlier this week, USPS won approval from the Postal Regulatory Commission for a temporary 8% price hike for Priority Mail and package deliveries, effective April 26, to address rising transportation and fuel costs.

The financial backdrop is stark. USPS has reported net losses of $118 billion since 2007 as first-class mail, its most profitable product, has fallen to its lowest volume since the late 1960s. The agency lost $9 billion in fiscal year 2025 and $1.3 billion in Q1 of fiscal year 2026 alone, with its cash runway estimated to run out around February 2027 without congressional help.

Steiner has asked Congress to raise the agency's decades-old $15 billion borrowing cap to $34.5 billion. "That will buy us the time to make the fixes we need to make, and we can sail on down the road," he told the Associated Press.

USPS said it will continue transmitting employees' own retirement contributions to OPM and will also keep transmitting employer automatic and matching contributions to the Thrift Savings Plan. The agency has deferred FERS payments before, doing so once in 2011 during a prior period of financial strain. Still, the move drew sharp criticism, with one union official calling the suspension the "direct result of continued inaction by Congress" to fix the legislative constraints placed on the Postal Service.

Congress has provided major financial relief to USPS before. Lawmakers passed reform legislation in April 2022 that saved the agency $107 billion in total costs, including eliminating $57 billion in past-due payments for retiree health benefits, and provided $10 billion in pandemic relief funds when the service neared collapse during the COVID-19 crisis. Whether a similarly decisive intervention arrives before the next cash cliff will define the future of universal mail service in the United States.