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The United States Postal Service (USPS) has temporarily suspended its contributions to a key federal pension program, warning that the move is necessary to avoid a looming cash crisis.

The agency confirmed it will halt payments into the Federal Employees Retirement System (FERS), a retirement plan that supports postal workers and other federal employees.

Officials said the decision is aimed at conserving cash as financial pressures continue to mount.

"The United States Postal Service is heading toward a cash crisis," USPS spokesperson David Walton said.

He explained that pausing the payments will help the agency maintain daily operations and cover essential costs.

The USPS typically contributes about $400 million each month to the pension system.

By suspending these payments, the agency expects to free up roughly $2.5 billion during the current fiscal year, USA Today reported.

Despite the pause, worker contributions will still be sent, along with payments tied to the Thrift Savings Plan and other benefits.

USPS Considers Price Hikes and Fewer Delivery

The decision follows warnings from Postmaster General David Steiner, who recently told lawmakers that the postal service could run out of cash within a year without major changes.

He suggested that options like raising stamp prices or reducing delivery days may be necessary to stabilize finances.

USPS Chief Financial Officer Luke Grossmann said the agency had to act quickly.

"The risk to the Postal Service and the American public from insufficient liquidity for postal operations dramatically outweighs any longer-term risk," he said, referring to the temporary halt in pension contributions.

Financial struggles at USPS have been building for years. According to CBS News, the agency reported a $9 billion loss in 2025, continuing a long trend of declining mail volume and rising delivery costs.

First-class mail, once its most profitable service, has dropped significantly as more people switch to digital communication.

To cope with rising expenses, USPS is also planning an 8% surcharge on some mailing services starting April 26, with the increase expected to remain in place through early 2027.

Leaders say these steps are part of a broader effort to keep the system running while longer-term solutions are explored.

Still, officials acknowledge the suspension is only temporary and not a full fix.