After losing $9 billion last year and another $1.3 billion in Q1, the US Postal Service has suspended contributions to employee retirement funds in a last-ditch effort to keep the lights on. The postmaster general told Congress the agency could be completely broke within months.
The United States Postal Service has taken one of the most desperate financial measures in its 250-year history — suspending all contributions to employee pension plans in a last-ditch attempt to keep the agency from running out of money. The announcement, made Wednesday, affects payments to the Federal Employees Retirement System and comes after back-to-back catastrophic losses: $9 billion in fiscal year 2025, followed by another $1.3 billion in just the first quarter of 2026. Postmaster General David Steiner told Congress in blunt terms that without legislative intervention, the USPS could completely exhaust its cash reserves as early as this fall, with total depletion virtually certain by February 2027. The pension freeze buys a few months of breathing room. It does not fix anything.
The collapse has been building for two decades. Since 2007, the Postal Service has posted a deficit in nearly every fiscal year as Americans abandoned first-class mail — the agency's most profitable product — in favour of email, paperless billing, and digital everything. Mail volume has been cut almost exactly in half since 2006, dropping from 213 billion pieces to roughly 109 billion. Package delivery has grown thanks to the e-commerce boom, but parcel margins are razor-thin compared to letters, and the USPS faces brutal competition from private carriers who can cherry-pick profitable routes while the Postal Service is legally required to deliver to every address in the country, six days a week, regardless of profitability. The result is an agency that delivers more boxes than ever before and still haemorrhages money at a staggering rate.
Steiner has warned that without Congressional action, the agency may have to consider cutting delivery days — a move that would hit rural communities, elderly Americans who depend on mail-order prescriptions, and small businesses that rely on affordable USPS shipping the hardest. The House Oversight Committee held hearings this month where lawmakers from both parties acknowledged the severity of the crisis but predictably disagreed on solutions: Republicans want deeper cost-cutting and selective privatisation, Democrats want direct federal funding and an end to the uniquely punishing mandate that forces the USPS to pre-fund retiree health benefits decades into the future. With Congress consumed by the Iran war and midterm election posturing, postal reform legislation has no clear path forward — leaving more than 600,000 postal workers and the millions of Americans who still depend on daily mail delivery waiting for a rescue that may never come.