USPS Plans to Halt Pension Contributions, Proposes 4-Cent Increase in Stamp Prices

Published: Friday, April 10, 2026 at 10:36 am

USPS Takes Drastic Measures to Address Financial Crisis

The U.S. Postal Service (USPS) is taking significant steps to address its ongoing financial challenges, including a temporary halt to employer contributions to the Federal Employees Retirement System (FERS) and a proposed increase in postage rates. The agency announced these measures on Thursday, citing a severe financial crisis that could lead to a cash shortage by February 2027 if current trends continue.

The Postal Service has notified federal budget officials of its decision to suspend employer contributions to FERS annuities. This move, which went into effect on Friday, is intended to conserve cash and ensure the agency can meet its operational obligations, including payroll and payments to suppliers. USPS officials have assured employees that the suspension will not immediately impact current or future retirees.

In addition to the pension contribution suspension, the USPS is seeking approval to raise postage rates. The proposed changes include an increase in the cost of a First-Class Mail Forever stamp, from 78 cents to 82 cents. The Postal Service submitted a notice to regulators on Friday, who must review and approve the proposed rate adjustments.

The Postal Board of Governors has made the decision to suspend pension payments in an effort to conserve cash and maintain liquidity. The Postal Service deferred payments in 2011 during another financial crisis. The agency will continue transmitting employee retirement contributions to the federal Office of Personnel Management, along with Thrift Savings Plan contributions, including employer automatic and matching funds, and will also maintain its employer contributions to Social Security.

The National Association of Letter Carriers has acknowledged the financial challenges facing the USPS, with its president stating that while the temporary suspension is not ideal, it is preferable to measures that would directly impact employees or service to the public.

The Postal Regulatory Commission granted the Postal Service a temporary waiver allowing it to redirect billions of dollars in revenue previously earmarked for retiree benefits. Postmaster General David Steiner has also called for other changes, including greater flexibility in how retirement funds are invested, changes to pension obligation methodology and the authority for USPS to raise postage prices high enough to cover losses.

The USPS relies primarily on the sale of postage, products, and services to finance its operations. The agency has experienced a significant decline in mail volume in recent years, from approximately 220 billion pieces in 2006 to 110 billion today. The USPS reported net losses of $9 billion for the 2025 fiscal year, despite an increase in operating revenue.

BNN's Perspective: The USPS's current situation highlights the need for a comprehensive review of its financial model and operational efficiency. While the immediate measures taken may provide temporary relief, long-term solutions require addressing the underlying issues of declining mail volume and rising costs. Congress must also consider its role in providing the USPS with the flexibility it needs to adapt to the changing landscape of communication and commerce.

Keywords: USPS, Postal Service, postage rates, pension contributions, financial crisis, First-Class Mail, Forever stamp, mail volume, David Steiner, Federal Employees Retirement System, FERS, Postal Regulatory Commission, rate increases, net losses, budget officials, Postmaster General

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