USPS Suspends FERS Contributions
The United States Postal Service (USPS) announced a temporary suspension of its employer contributions to the Federal Employees Retirement System (FERS) defined benefit plan. This becomes effective April 10, 2026. This drastic move, aimed at preserving cash flow, comes as the Postal Service faces a severe, ongoing financial crisis. The projections indicate it could run out of operational cash as early as February 2027.
While this suspension frees funds to make payroll, it raises questions about the long-term financial stability of the service and the security of worker pensions.
The Postal Service claims that the decision to pause payments is necessary to maintain cash flow for daily operations, including paying employees and suppliers. The Postal Service pays roughly $200 million every two weeks to the Office of Personnel Management (OPM) for the FERS annuity. By pausing these payments through the end of the fiscal year, the USPS expects to conserve approximately $2.5 billion.
“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,” said USPS Chief Financial Officer Luke Grossmann.
Mr. Grossman has gone on to emphasize that maintaining operational cash outweighs the immediate risk to the pension fund. The agency continues to advocate for long-term reform of its retirement funding obligations.
Key Facts About the FERS Suspension:
What is Paused: Only the employer contributions to the FERS defined benefit annuity.
What Continues: USPS will continue to withhold employee contributions to FERS and transfer them to OPM.
Thrift Savings Plan (TSP): All automatic and matching contributions to the TSP will continue as normal.
Impact on Retirees: According to USPS and the National Union, there is no immediate impact on the benefits of current or future retirees.
Scope: The suspension applies to FERS, which covers about 84.5% of career employees, and does not affect the Civil Service Retirement System (CSRS).
The USPS has reported mounting financial losses for years, totaling billions in deficits since 2007. This is driven by declining first-class mail volume and high operating costs. Despite receiving significant financial relief from Congress through reform legislation in April 2022, which eliminated $57 billion in past-due health benefit payments, the agency continues to struggle.
The National Union noted that this pause is a “direct result of continued inaction by Congress to fix the legislative constraints that inhibit the Postal Service’s ability to invest in its infrastructure”.
While the Postal Service emphasizes no immediate threat to pension payments, the move has caused concern. The National Active and Retired Federal Employees Association (NARFEA) questioned the legality of the decision. They have been stating that federal statute requires these payments and that the action, “sets a dangerous precedent for the secure funding of postal and federal retiree pensions.”
The NALC is monitoring the situation closely and has emphasized that member benefits are legally guaranteed regardless of the funding pause.
The Office of Personnel Management (OPM) is legally responsible for administering and paying retirement benefits to eligible U.S. Postal Service (USPS) retirees under the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS). While USPS funds these liabilities via revenue and employee contributions, OPM manages the trust funds and processes the annuity payments.
Title 5 of the United States Code (USC) ensures that all current, past and future employees will receive their retirement pension benefit. The Civil Service Retirement System (CSRS) mandates that employees hired before January 1,1987 are covered under 5U.S.C. Chapter 83 (Subchapter III) 1.2.3.
For Federal Retirement Employees Retirement System (FERS) mandates that all employees hired on or after January 1, 1987, are covered under 5 U.S.C. Chapter 84. The Payment Rule is Title 5 U.S.C. § 8470 and the Integration Rule is 5 U.S.C. § 8402 which outline employees are covered by FER, binding Federal Agencies and the Postal Service to the same retirement trust system.
The Postal Service continues to push for legislative changes, including a new investment strategy for retiree health and pension funds, a recalculation of its CSRS obligations, and increased borrowing authority.
Key Impacts on Retirement and Benefits:
FERS Benefits Secure: The pause, which lasts until Congressional relief is provided, does not affect the guaranteed retirement benefits for current or future retirees.
Continued Withholding: USPS will continue to deduct employee contributions from paychecks.
TSP Unaffected: The Thrift Savings Plan (TSP) remains fully funded; USPS will continue paying the employees automatic 1%, and matching contributions (up to 5%) to TSP accounts.
I suggest that you take a few minutes to review your actual contributions into your TSP Account and verify the amount that went into your account. Check your pay stub and confirm that your FERS and TSP deductions still appear correctly. Log in to your TSP account and make sure the match shows up. Review any USPS communications or updates so you understand what has and has not changed. Keep your P.S Form 50’s, pay statements, and any USPS emails or notices. If something needs to be fixed later, you’ll need these items to assist you in correcting any errors.
