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USPS Suspends $2.5B Pension Payments, Warns Congress to Act by 2027

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The U.S. Postal Service moved to halt billions of dollars in pension payments this week, warning it could run out of cash as soon as early 2027 without intervention from Congress, regulators or both foxbusiness +1. The temporary suspension of employer contributions to a key federal retirement plan is expected to conserve about $2.5 billion in the current fiscal year, buying time but raising fresh questions about the long‑term health of postal finances wsws +1.

USPS notified the Office of Personnel Management that, effective April 10, it would stop sending biweekly employer payments—about $200 million every other week—to the defined‑benefit portion of the Federal Employees Retirement System (FERS) foxbusiness +1. The cash‑saving step came alongside recent regulatory relief that lets the agency redirect revenue previously earmarked for retiree benefits, and on the heels of a proposal to raise the price of a First‑Class “Forever” stamp from 78 to 82 cents starting in July usps +1.

A Short-Term Lifeline for a Long-Running Cash Crisis

Postal leaders framed the move as a last‑resort liquidity maneuver to keep mail moving and payrolls met as losses mount and borrowing options narrow. USPS posted a $9 billion net loss in fiscal 2025 and has accumulated roughly $118 billion in losses since 2007, even as first‑class mail volume has fallen by about half over two decades americanbazaaronline +1. Postmaster General David Steiner previously told Congress the agency could exhaust its cash by February 2027 under “business as usual,” constrained by a $15 billion statutory borrowing cap it has already hit cbsnews +1.

The Postal Regulatory Commission on Thursday granted a multi‑year waiver that lifts some of its own funding restrictions, potentially freeing $2.4 billion in 2026 and up to about $15 billion through 2030 by allowing USPS to repurpose retiree‑related revenues apnews. USPS Chief Financial Officer Luke Grossmann argued “the risk to the Postal Service and the American public from insufficient liquidity…dramatically outweighs any longer‑term risk to the pension funds” from delaying payments, and said there would be “no immediate detrimental impact” on current or future retirees foxbusiness.

Workers, Unions and Lawmakers Weigh Pension Risks

Postal unions moved quickly to reassure anxious employees while pressing lawmakers to address what they described as a manufactured structural crisis. The National Association of Letter Carriers called the pause “not ideal” but said it has “no immediate impact on any current or future retired letter carriers,” blaming “continued inaction by Congress” for forcing the move newsnationnow. The American Postal Workers Union told members their benefits are “earned and guaranteed by law” even as it cautioned it is still reviewing the suspension pix11.

USPS stressed it will continue transmitting employees’ own FERS contributions, Social Security payments and Thrift Savings Plan contributions, and that pension checks will keep flowing to current retirees foxbusiness. But some consumer advocates and analysts warned that repeatedly diverting money meant for future benefits could increase long‑term funding pressures if Congress does not overhaul how USPS finances its universal service mandate usps +1. Lawmakers are facing renewed calls to raise the borrowing cap, revisit retiree funding rules and clarify what level of service—such as six‑day delivery—the public is willing to pay for usatoday +1.

The Bigger Picture

The pension payment suspension underscored how close America’s mail carrier is skirting a liquidity edge, relying on rate hikes, regulatory waivers and now delayed retirement funding to stay afloat. With unions publicly backing workers’ benefit guarantees while pointing back to Capitol Hill, and regulators warning their relief is temporary, the decision intensified pressure on Congress to decide whether to stabilize the Postal Service with deeper structural changes—or risk testing how far short‑term fixes can stretch before service, and trust, begin to fray.