The U.S. Postal Service (USPS) will stop making employer contributions to the Federal Employees Retirement System (FERS) Friday, officials say.
The USPS is planning to suspend contributions to come up with some of the cash needed to make a $5.5 billion contribution to a retiree health benefits contribution fund, officials say.
If the USPS does not win congressional approval to delay the retiree health benefits contribution, the postal service faces insolvency, officials say.
The FERS system includes a defined benefit component and a defined contribution component. The USPS hopes to save about $800 million per year by suspending contributions for the defined benefit component, officials say.
The system now covers 85% of career postal workers.
Congress passed a law in 2006 that requires the USPS — and only the USPS — to prefund retiree health benefits.
Postmaster General Patrick Donahoe warned in May, during a hearing organized by the Federal Financial Management Subcommittee of the Senate Committee on Homeland Security and Governmental Affairs, that the requirement could push the USPS over the brink.