The US Postal Service is cutting off some pension fund payments as it struggles to have enough money on hand to keep operating. The decision halts employer contributions to the Federal Employees Retirement System for postal workers and other federal employees, the agency said Thursday, describing the move as temporary. The change affects roughly $400 million in payments each month, CBS News reports. A spokesperson said the Postal Service is "heading toward a cash crisis" and needs to preserve money for core operations and other required payments.
The agency will still forward employee contributions to FERS, along with automatic and matching employer payments and worker contributions to the Thrift Savings Plan, a separate federal retirement program. Suspending the FERS payments is expected to free up about $2.5 billion in the current fiscal year. USPS Chief Financial Officer Luke Grossmann said the danger of not having enough cash to run postal operations "dramatically outweighs" the longer-term risk to the pension funds from skipping payments now. Postmaster General David Steiner told Congress last month that, without major changes, the Postal Service could exhaust its cash in about a year, potentially halting mail delivery.
The president of the National Association of Letter Carriers said the suspension of annuity payments doesn't immediately affect his members, who he said understand the Postal Service's financial challenges, per the AP. "Given a menu of options, none of which are overall positive, they would certainly prefer the Postal Service making a move like this as opposed to something that immediately impacts them or immediately impacts in a negative way the service that we provide to the American people," Brian Renfroe said.
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