USPS is temporarily suspending employer contributions to FERS, effective April 10, to free up approximately $2.5 billion in the current fiscal year.
The agency has been facing billion-dollar net losses since 2007 and warns it could run out of cash within a year if it continues to pay bills on time.
This is not the first time USPS has taken such measures; a similar suspension occurred in 2011.
USPS is planning to raise the price of a first-class forever stamp from 78 cents to 82 cents on July 12.
CFO Luke Grossmann assures that there will be no immediate detrimental impact to current or future retirees, emphasizing that the risk to the Postal Service outweighs any longer-term risk to pension funds.
USPS's decision to suspend FERS contributions comes as Postmaster General David Steiner warned lawmakers about the agency's dire financial situation. The agency is seeking legislative reforms, including extending its borrowing limit with the Treasury Department and adjusting its contributions to the Civil Service Retirement System (CSRS).
In April 2022, Congress passed reform legislation that saved USPS $107 billion, including $57 billion in past-due payments for retiree health benefits. Additionally, the Postal Regulatory Commission granted a waiver allowing USPS to repurpose billions in revenue normally reserved for retiree benefits.
Despite these measures, the agency faces continued financial strain, leading to actions such as the proposed postage increase and temporary suspension of pension contributions. These steps are intended to provide USPS with short-term financial relief while it seeks longer-term solutions.
Q: What happens to employee contributions to FERS and the Thrift Savings Plan (TSP)?
USPS will continue to transmit employees’ contributions to FERS and will also continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan.
Q: How much does USPS usually pay into the FERS annuity?
The Postal Service pays about $200 million every other week to OPM for the FERS annuity.
USPS is facing significant financial challenges, leading to temporary measures like suspending pension contributions.
The agency assures that employee retirement benefits will not be immediately impacted.
Potential postage increases are on the horizon.
Long-term solutions require legislative action and continued reform efforts.
What do you think about the USPS's plan to conserve cash? Will these measures be enough to stabilize the agency's finances? Share your thoughts in the comments below!
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