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Postal Service Urgently Required to Fund Employee Pension Obligations for a Secure Future

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USPS Urged to Fully Fund Pension Obligations and Seek New Legislation

USPS Urged to Fully Fund Pension Obligations and Seek New Legislation

By Paul Steidler, Lexington Institute

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The U.S. Postal Service (USPS) is legally obligated to provide $5 billion in funding for its employees’ pensions by September 30. If it fails to do so, employees’ benefits are at far greater risk, and a terrible precedent has been set that could seriously erode the value of these plans and even what employees receive. It would also send a clear signal that USPS’s finances are again in major trouble.

Full Funding Demanded

USPS’s Board of Governors, postal labor unions, and Congress should all demand full funding by September 30 to the U.S. Office of Personnel Management (OPM). This issue goes to the heart of USPS’s credibility and proper financial stewardship.

Financial Assistance and Current Assets

USPS has faced serious financial hemorrhaging for over a decade. Still, it got enormous assistance when Congress provided $107 billion in financial aid as part of the 2022 Postal Service Reform Act (PSRA). This was on top of $10 billion in assistance via COVID funding and $3 billion to help with electric vehicle purchases. As of June 30, 2023, USPS had $19.95 billion in cash and other highly liquid assets, a hugely disproportionate amount for an organization of its size, with approximately $78 billion in annual revenues.

Pension Contribution

The need for the pension contribution is clear. As USPS states in its fiscal year 2023 third quarter 10-Q report, “Based on preliminary information provided by OPM, we estimate our annual payments due September 30, 2023 will be $3.1 billion and $1.9 billion for the Civil Service Retirement System (CSRS) amortization and Federal Employees Retirement System (FERS) amortization, respectively. We expect to receive the invoice from OPM for the actual amounts due September 30, 2023 during the fourth quarter of 2023.”

As also stated in the 10-Q, from fiscal years 2012-22, USPS defaulted on $18.1 billion of CSRS and FERS obligations. To continue to do so after receiving such massive assistance from PSRA in 2022 would be an affront to many in Congress. And it raises questions of good faith from USPS management towards its employees and taxpayers.

Investment in Stocks and Bonds

Simply put, postal employees have greater security that their benefits will be paid when they are under lock and key at OPM. While Congress has been exceedingly generous in providing financial assistance to USPS in the past, there is certainly no guarantee of that in the future, especially with avoidable defaults. There would be even greater security for the benefits, and lower costs to USPS, if USPS could invest these funds as state pension funds do for teachers and government workers, in a mix of stocks and bonds.

USPS’s Inspector General has documented the major benefits from a diversified investment approach. There is widespread support for this, including from the National Association of Letter Carriers, fiscal conservatives, and widely respected postal advocate Congressman Stephen Lynch (D-MA).


USPS should make the $5 billion, legally required payment and place the highest emphasis on securing new postal legislation allowing its pension funds to be invested in stocks and bonds. Failure to do so would not only jeopardize employee benefits but also damage USPS’s financial credibility. Congress should launch an immediate and prompt oversight investigation if the payment is not made.

About the Author: Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.

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