USPS to Suspend Pension Contributions and Proposes 4-Cent Stamp Price Hike Amid Financial Crisis
Washington, D.C., April 9, 2026 — The United States Postal Service (USPS) announced plans to temporarily suspend its employer contributions to the Federal Employees Retirement System (FERS) annuities, a move aimed at preserving cash amid a severe financial crisis. Simultaneously, the USPS has filed a request to raise postage rates, including a 4-cent increase for a First-Class Mail Forever stamp—from 78 cents to 82 cents—pending approval by postal regulators.
Suspension of Pension Contributions to Maintain Operations
In an internal message to USPS employees, Chief Financial Officer Luke Grossmann explained that the decision to pause pension contributions was necessary "to keep making payroll, paying suppliers, and delivering the mail." He characterized the financial situation as “ongoing, severe,” warning that the Postal Service could run out of cash by February 2027 if the crisis continues unmitigated.
This suspension, effective as of Friday, will not immediately affect current or future retirees’ benefits, according to Grossmann. He emphasized that “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 USPS previously deferred pension payments in 2011 during another period of economic hardship.
Importantly, the agency will continue to transmit employees’ own retirement contributions to the federal Office of Personnel Management and maintain contributions to the Thrift Savings Plan and Social Security, ensuring that employee benefits remain intact for now.
Union Response and Congressional Inaction
Brian Renfroe, president of the National Association of Letter Carriers, acknowledged that the temporary suspension of annuity payments is “not ideal” but noted it does not immediately impact USPS workers. He expressed that postal employees understand the gravity of USPS’s financial challenges and prefer this option over alternatives that might more directly affect pay or service quality.
Renfroe also attributed this fiscal predicament to “continued inaction by Congress” in addressing restrictive legislative measures that hamstring the USPS’s financial flexibility.
Postal Regulatory Commission Provides Temporary Relief
Amid these developments, the Postal Regulatory Commission granted USPS a temporary, multiyear waiver allowing the agency to redirect billions of dollars previously allocated for retiree benefits. This reprieve offers “some breathing room and flexibility” to execute contingency plans and stave off a cash crisis.
Postmaster General’s Appeal for Increased Borrowing Authority
Earlier in March, Postmaster General David Steiner urged Congress to raise the USPS borrowing cap from $15 billion to $34.5 billion. He emphasized that increasing this borrowing authority would provide the USPS the financial runway necessary to implement reforms critical to the organization’s survival.
Steiner has also called for reforms including enhanced flexibility in how retirement funds are invested, changes to pension calculation methodologies, and greater authority to raise postage rates sufficiently to cover operational losses.
Proposed Postage Rate Increases
The USPS submitted its rate increase proposal on Friday, requesting permission to raise postage not only for the First-Class Mail Forever stamps but also for postcards and international letters. The agency highlighted that even with these increases, U.S. postage rates would remain among the most affordable worldwide.
Background: Declining Mail Volume and Growing Losses
The USPS’s ongoing financial woes are driven by a sharp decline in mail volume over the past two decades—from approximately 220 billion pieces in 2006 to about 110 billion pieces today—as digital communication replaces traditional mail.
Despite slight revenue gains of $916 million (1.2%) in the recent fiscal year, largely attributed to its Ground Advantage shipping service, the USPS reported a net loss of $9 billion for fiscal year 2025, closely matching 2024’s losses of $9.5 billion.
Consumer Advocacy Groups Respond
Keep Us Posted, an advocacy coalition representing consumers, publishers, and others reliant on postal services, has urged Congress to ensure that any postage rate hikes be limited to once annually. The group also stresses maintaining six-day delivery service and strengthening regulatory oversight over USPS service changes.
Conclusion
Facing dwindling revenues, rising costs, and legislative constraints, the USPS’s decision to suspend pension payments and seek rate increases underscores the gravity of its financial challenges. The next steps, including regulatory approval of postage hikes and congressional action on borrowing limits, will be crucial in determining the Postal Service’s future viability.
Filed under: Office of Personnel Management, Postal Service, Stamps