USPS Raids Its Own Pension Fund

Hello Friday.

America's postal service just stopped paying into its workers' retirement fund. Not because it wants to — because it's running out of cash. This one's about a 250-year-old institution borrowing from its own future

Coffee at the ready.…

The USPS financial crisis just hit a new low:

The agency is raiding its workers' pension fund to stay afloat. USPS suspended employer contributions to the Federal Employees Retirement System yesterday — freeing up $2.5bn this fiscal year. The trade-off: future retirees pick up the tab.

Watch for Congress to either raise the borrowing cap or let six-day delivery die.

Pension fund as petty cash. Peak America.

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$118bn in losses since 2007.

First-class mail — the agency's best earner — has dropped to volumes not seen since the 1960s. The borrowing limit sits at $15bn, a cap Congress set in 1992 and never raised.

USPS maxed it out years ago.

Postmaster General David Steiner, a former FedEx board member who took over last July, told Congress the agency could run dry as soon as October.

His predecessor's turnaround plan promised to break even by 2024. USPS posted a $9.5bn loss instead. Amazon is also pulling back.

The company is reducing the volume it ships through USPS — right as the agency auctions off last-mile delivery access to survive.

Steiner's pitch to Congress: hike the price of stamps from 78 cents to 95 cents or more.

He also wants the borrowing limit raised and pension funds invested beyond Treasury bonds. An 8% surcharge on packages kicks in on April 26. Cutting delivery days is on the table…

But federal law still requires six-day service to 169 million addresses.

The GAO's verdict is blunt:

The business model is "unsustainable."

USPS has been on its High Risk list since 2009. And starting this year, it owes an estimated $750m in new retiree health care payments — costs Congress mandated but never funded.

Pro: The pension fund is 76% funded, retiree cheques aren't at risk today, and USPS's own inspector general says the agency overpaid $80–111bn into an older federal pension system — money Congress could reclassify to fix the balance sheet overnight.

Con: Skipping pension payments to cover operations is a crisis move, not a strategy — and it's the second time USPS has done it in 15 years.

Our read: Congress built an agency required to serve everyone, funded by a product nobody uses anymore, then capped its ability to borrow or price its way out — the pension raid is a symptom, not the disease.

[Report] GAO — "U.S. Postal Service: Action Needed to Fix Unsustainable Business Model"

USPS would run out of cash as early as FY 2026 if it paid all required pension and benefit obligations in full.

Why it matters: The watchdog confirms the funding model is broken. It also called out USPS for refusing to publish financial projections showing how its own reforms will close the gap.

33 days of cash on hand. $90bn in annual costs. — Brookings

Brookings — "The US Postal Service's Fiscal Crisis" — The best structural explainer of why this isn't about stamps or Amazon. It's about a financing model built for 1970 running in 2026.

Marketplace — "USPS Lost $9 Billion Last Fiscal Year. What Now?" — Amazon is pulling volume from USPS just as the agency auctions off its last-mile network. Brutal timing.

Federal News Network — "USPS Suspends Contributions to Pension Plan" — The most detailed breakdown of today's FERS suspension, plus the regulatory waiver freeing $2.4bn in retiree benefit revenue.

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For the love of coffee, see you Monday!

Enjoy your Friday, keep it caffeinated.

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