The United States Postal Service (USPS) is taking an unusual step to stay afloat as it faces a deep financial crunch. The agency said it will temporarily stop making its employer contributions to federal retirement funds so it can continue paying salaries, suppliers, and keep mail moving across the country.
In an internal message, Chief Financial Officer Luke Grossmann described the situation as an “ongoing, severe financial crisis.” He warned that without such measures, the Postal Service could run out of cash by around February 2027. The suspension starts immediately, but he said it will not have any direct impact on current or future retirees for now.
Grossmann explained the reasoning clearly. “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,” he said. This is not the first time such a move has been taken. The agency had also delayed similar payments during a financial crisis in 2011.
Even with this pause, the Postal Service said it will continue sending employees’ retirement contributions to the Office of Personnel Management. It will also keep paying into Social Security and continue contributions to the Thrift Savings Plan, including matching funds.
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For workers, the move is “not ideal” but understandable. Brian Renfroe, who leads the National Association of Letter Carriers, said employees know the agency is under pressure. “Given a menu of options, none of which are overall positive, they would certainly prefer the Postal Service making a move like this as opposed to something that immediately impacts them or immediately impacts in a negative way the service that we provide to the American people,” he said.
The crisis is building up due to multiple factors. Traditional mail volumes have been falling for years as more people switch to digital communication. At the same time, the agency is bound by strict rules and costs that make it hard to adjust quickly. Nearly all career employees are part of the federal retirement system, which adds to long-term financial commitments.
Postmaster General David Steiner has been pushing for changes to help the agency survive. He has asked lawmakers to lift a long-standing borrowing limit so the Postal Service can access more cash. “That will buy us the time to make the fixes we need to make, and we can sail on down the road,” he said. He has also suggested giving the agency more freedom to raise stamp prices to cover its losses.
At the same time, there is pressure from consumer groups like Keep Us Posted. They want any price increases to be limited and are pushing to protect six-day mail delivery, which many Americans still depend on.
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Another challenge comes from business partnerships. Amazon, the Postal Service’s largest customer, has been renegotiating its delivery deal. The two sides have reached a tentative agreement that allows USPS to continue handling about 80 percent of Amazon deliveries. Earlier, Amazon had considered cutting a much larger share.
An Amazon spokesperson, Terrance Clark, said, “We’re pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together.”
Still, the deal includes a reduction in deliveries and needs approval from the Postal Regulatory Commission. Amazon already handles a growing share of its own logistics and has been cutting back on how much it depends on the Postal Service.
All of this shows the bigger picture. The Postal Service is trying to balance rising costs, falling traditional mail, and changing business needs as the mail volume has fallen sharply from around 220 billion pieces in 2006 to nearly 110 billion today. This steady decline has cut into one of the agency’s main sources of revenue, making its financial challenges even more difficult to manage.