June 22 (Bloomberg) -- The U.S. Postal Service, facing
insolvency unless it gets approval to delay a $5.5 billion
payment for worker health benefits, will suspend contributions
to an employee retirement account to save $800 million this
year.
     The Postal Service will stop paying employer contributions
to the defined-benefit Federal Employees Retirement System,
which covers about 85 percent of career postal workers, it said
today in an e-mailed statement. The $115 million payment, made
every other week, will stop on June 24, the statement said.
     Suspending payments to the retirement account will help
“conserve cash and preserve liquidity,” the statement said.
The agency estimates it has overpaid the retirement account by
$6.9 billion and has asked Congress to pass legislation to
return that money.
     The suspension will save the Postal Service $800 million
through the end of its fiscal year, it said. The agency said it
still needs Congress to enact laws that would help cut costs and
restore financial stability.
     Even with the cuts, the service wants the authority to end
Saturday delivery and reduce pre-payment of health benefits for
retirees. It has said it will not be able to make a $5.5 billion
payment due Sept. 30 for health benefits for future retirees.
     The Postal Service reported a loss of $8.5 billion in its
2010 fiscal year. It also reported a widening second-quarter
loss, to $2.6 billion, on declining volumes of first-class mail.
     The service will continue to transmit employee
contributions to the pension fund and will make payments to the
Thrift Savings Plan, a defined contribution federal retirement
plan, Chief Human Resources Officer Anthony Vegliante said in
the statement.