The U.S. Postal Service is suspending its contributions to the Federal Employees Retirement System, a pension plan for its workers and other civil servants, as the agency struggles with mounting losses that put it at risk of running out of funds.

"The United States Postal Service is heading toward a cash crisis," USPS spokesman David Walton said in a statement to CBS News. "The step we are now taking to suspend FERS payments helps conserve cash for our operations and other necessary payments."

The USPS contributes about $400 million a month to its employee pension plan, the agency said in a statement on Thursday. The postal service said it will continue to send worker contributions to the retirement plan and will also transmit employer automatic and matching contributions, as well as employee contributions to the Thrift Savings Plan, another retirement program for federal workers.

Out of cash in a year
The temporary halt in contributions to the USPS program comes after Postmaster General David Steiner warned Congress last month that the postal agency is heading for a financial crisis without a course correction. Those changes could include raising the cost of a first-class stamp to 95 cents or reducing delivery from its current six days per week schedule to five or fewer, he said.

Without such changes, Steiner said, the USPS could run out of cash within 12 months, which could result in a stoppage of mail delivery.

The USPS has for years struggled with high costs and dwindling mail volume, culminating in a $9 billion loss in 2025. Although the Postal Service has a 10-year plan to reduce expenses and restore profitability, the agency still faces major financial challenges as mail volume continues to decline and delivery costs rise.

On Thursday, USPS Chief Financial Officer Luke Grossmann said in a statement that the risk of "insufficient liquidity for postal operations dramatically outweighs any longer-term risk to the pension funds from not making the currently due payments."

Suspending payments to FERS will free up about $2.5 billion in the current fiscal year, the postal agency said.

The USPS said in March that it plans to temporarily hike postage prices to cover mounting fuel costs due to the Iran war. The agency said it will add an 8% surcharge on some postage prices beginning April 26, with those added costs remaining in place through Jan. 17, 2027.

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