(TNND) — The United States Postal Service (USPS) told federal budget officials Thursday that it will temporarily suspend its employer contributions to Federal Employees Retirement System (FERS) annuities to “conserve cash” and continue making payroll, paying suppliers and delivering the mail.
The update comes after Postmaster General David Steiner warned Congress in March that the Postal Service could run out of cash within the next year if the independent agency does not borrow money.
“In about a year from now, the Postal Service would be unable to deliver the mail if we continue the status quo,” Steiner said during a House Oversight hearing. “I like to say that we got thrown overboard and into the water. But instead of tossing us a life jacket, we were thrown an anchor.”
Postal Service Chief Financial Officer Luke Grossmann said the move is intended to preserve cash and liquidity amid the Postal Service’s “ongoing, severe financial crisis.”
However, he said current and future retirees will not be immediately impacted.
“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 in a statement. USPS deferred payments in 2011 during another financial crisis.
The agency added that it will continue transmitting employees’ retirement contributions to the federal Office of Personnel Management, along with Thrift Savings Plan contributions — including employer automatic and matching funds — and will also maintain its employer contributions to Social Security.
Suspending FERS payments, effective April 10, will free up about $2.5 billion in the current fiscal year, according to USPS.
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Separately, USPS has also proposed an 8% temporary surcharge on certain products to offset rising fuel costs tied to the Iran war. The surcharge would take effect April 26 and remain in place through Jan. 17, 2027, pending final approval.