Postal Service Halts Pension Payments, Seeks Stamp Hike as Financial Crisis Deepens

The U.S. Postal Service is reportedly taking extraordinary steps to stay afloat, announcing it will temporarily suspend its employer contributions to federal retirement annuities in order to maintain basic operations. The move, disclosed Thursday, is aimed at preserving enough cash to continue paying workers, suppliers, and ensuring mail delivery across the country.

Postal officials say the decision reflects the severity of the agency’s financial position. In an internal message to employees, Chief Financial Officer Luke Grossmann described the situation as an “ongoing, severe financial crisis,” warning that the Postal Service could run out of cash as early as February 2027 if corrective actions are not taken.

The suspension, which took effect Friday, does not immediately impact current or future retirees, according to officials. The agency will continue forwarding employee retirement contributions, along with Thrift Savings Plan payments and Social Security contributions. Still, the decision underscores the difficult balancing act facing USPS leadership as they attempt to keep the system running without disrupting benefits in the short term.

Grossmann defended the move as necessary, arguing that the immediate risk of failing to fund day-to-day operations outweighs the longer-term concerns associated with delaying pension payments. The agency took similar action in 2011 during a previous financial downturn, signaling that such measures, while rare, are not unprecedented in times of crisis.

At the same time, the Postal Service is pushing for higher postage rates to help close the gap. It has filed notice with regulators seeking approval to raise the cost of a First-Class Mail Forever stamp from 78 cents to 82 cents, along with increases for postcards and international mail. Regulators must still sign off on the proposed changes.

Union leaders appear to be cautiously supportive of the temporary measures. Brian Renfroe, president of the National Association of Letter Carriers, acknowledged the suspension of annuity payments is “not ideal,” but said it avoids more immediate harm to employees or service. Faced with limited options, he indicated workers would rather see this step than cuts that directly affect their livelihoods or the reliability of mail delivery.

Nearly all career USPS employees are covered by the Federal Employees Retirement System, making the stakes of any pension-related decision especially significant. Meanwhile, the Postal Regulatory Commission has granted the agency additional breathing room by approving a temporary, multi-year waiver that allows billions previously set aside for retiree benefits to be redirected toward operations.

Postmaster General David Steiner has also called on Congress to raise the agency’s borrowing cap from $15 billion to $34.5 billion, arguing that increased access to funds would buy time for long-term reforms. He has pushed for broader changes as well, including adjustments to pension funding rules and greater flexibility in setting postage rates.

Critics, including labor representatives, say the situation is the result of years of congressional inaction. Renfroe described the current crisis as a direct consequence of legislative constraints that have left the Postal Service struggling to adapt.

See also

Politics

CNN’s Zakaria Slams ‘Blue Cities’ as Costly, Dysfunctional and Failing Residents

Outside groups are also weighing in. The advocacy coalition Keep Us Posted is urging lawmakers to limit how often rates can increase and to protect six-day mail delivery, while also calling for stronger oversight of service changes.

The challenges facing USPS are compounded by a dramatic decline in mail volume, which has dropped from roughly 220 billion pieces in 2006 to about 110 billion today as Americans increasingly turn to digital communication. Despite a modest revenue increase driven in part by its Ground Advantage shipping service, the agency posted a $9 billion net loss in fiscal year 2025, following a $9.5 billion loss the year prior.

As the Postal Service navigates these mounting pressures, its latest actions reflect a system under strain—one trying to preserve its core mission even as financial realities tighten their grip.