The USPS has announced that it’s temporarily pausing FERS payments, starting April 10. For any USPS retirees or workers who are getting ready to retire, this sounds like scary news.
But here’s some reassurance – there will be no immediate impact on current or future retirees.
The USPS is pausing employer contributions, but all employee contributions and deductions will be the same. Your TSP contributions will also continue as normal.
This isn’t the first time USPS has used this kind of measure. In 2011, during another period of serious financial strain, it temporarily paused its FERS payments to preserve cash. A few months later regular payments resumed, and USPS repaid what it owed to OPM.
Frequently Asked Questions
Why is this confusing?
Because most people hear “USPS paused pension contributions” and think of retirement like a 401(k): less money going in must mean less money later. It’s a reasonable reaction.
What is my FERS retirement made up of?
FERS retirement has three parts: a pension, Social Security, and TSP.
So, what is the pension side of retirement?
It’s the part of your retirement that’s meant to pay you a monthly check after you retire – not a savings bucket with your name on it. It’s the more traditional pension side of federal retirement.
What do I actually get from that pension?
You’ll get a monthly retirement benefit. That benefit is tied to your federal service and pay history (your High-3) – not to a running balance in an individual account.
So what’s the difference between my federal pension and TSP?
A TSP works like your own account. The amount you end up with depends on how much goes in and how it grows over time. It’s the part of federal retirement that works much more like a private-sector 401(k), and TSP contributions and matching are still continuing. A USPS federal pension works differently. It is part of the FERS Basic Benefit Plan, which is built to provide a monthly retirement payment rather than act like a personal investment account.
Then why does USPS contribute money at all?
Because USPS still has to help fund the pension system. Those employer payments help support the system, but they aren’t the same thing as money going into a personal retirement account with your name on it.
So, a pause in payments doesn’t automatically mean my pension will be smaller?
No, because the pension side of FERS isn’t based on watching an individual account balance rise and fall. During this pause, current employees still keep earning the retirement credit that counts toward that pension benefit.
What part of retirement is actually being affected?
What’s being paused is USPS’s side of certain pension funding – not every piece of retirement. Employee deductions are still continuing, and TSP contributions are still continuing too.
Does this mean my whole retirement changed?
No. This might be the biggest misunderstanding. This affects one part of how the pension system is being funded. It doesn’t mean your TSP stopped, your paycheck deductions stopped, or your whole retirement disappeared overnight.
Does this affect my pension?
No – there won’t be any changes for current or future retirees. This pause reflects the poor financial state of the USPS, but it doesn’t mean your pension disappeared overnight.
Will retirees still get paid?
Yes! If you’ve already retired, you’ll keep getting checks as usual. That’s because your retirement checks are coming from the OPM, not the USPS.
Will my TSP be affected?
Your TSP is safe. TSP contributions won’t be touched, so you don’t have to worry about that going away.
Is this temporary?
This measure is meant to be temporary, but it’s worth thinking about the big picture. The USPS is seriously struggling, so this pause and other cost cutting measures might not be going away any time soon.
Why is the USPS doing this?
This pause is part of a larger cash crisis. USPS is trying to preserve cash, and this move is expected to free up about $2.5 billion this fiscal year.
What if I’m already struggling at work?
If all this stress and uncertainty is hitting you at a time when you’re already struggling at work because of a medical condition, it might be a good time to step back and weigh your options.
One way out of this is Federal Disability Retirement. It’s for injured and ill federal workers and it offers benefits that will protect your future:
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- Monthly paychecks
- Continued health and life insurance
- The option to work in the private sector
- Your pension keeps growing until age 62
You can learn more about Disability Retirement for USPS workers on this webinar.
So even though there’s no need to leave work immediately, this pause is a sign of some real financial instability. Disability Retirement could be one way out of that struggling system. Schedule a free consultation with us today to discuss your options.
