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Washington, DC, United States (AHN) – The U.S. Postal Service plans to suspend payments to a pension fund, the latest step the cash-strapped agency is taking while it continues to push for legislation to adjust mandatory payments for employee benefits.

In a statement on Wednesday, the Postal Service said it would stop its weekly $115 million contribution for the Federal Employees Retirement System annuity on Friday.

The decision will save the agency about $800 million in the current fiscal year. It will have little effect on the pension fund, for which the Postal Service has an overpayment of $6.9 billion.

Access to the surplus fund is one of the issues the agency has asked of Congress. In addition, the agency is seeking a bill giving it authority to determine frequency of mail delivery as well as ending pre-payments for retiree health benefits.

The Postal Service warned as early as last year that it had insufficient cash to meet a $5.5 billion payment to its Retiree Health Benefit Fund due on Sept. 30, 2011.

The agency receives no federal funds for its operations and depends only on revenues from postage and other services.

It has been struggling to remain viable since the growth of electronic communications, with mail volume falling 20 percent between 2006 and the following year. In the previous fiscal year, net loss was $8.5 billion.

Cost-cutting measures, such as layoffs of 110,000 career positions, have saved it $12 billion in the past four years but liquidity issues have remained. The agency has also implemented steps to raise revenue, opening retail locations in supermarkets and drug stores.

Last year, it sought to raise revenue by increasing the price of first class mail to 46 cents, and of postcards to 30 cents. The Postal Regulatory Commission, however, unanimously ruled against a rate hike, saying there were no exigent circumstances to justify it.

“The Postal Service knows how to cut costs, streamline… and make the necessary changes to bring our organization further into the 21st century,” David Williams, the agency’s vice president of network operations, testified before the House Committee on Oversight and Government Reform last week. “Our achievements notwithstanding, issues that fall outside our control continue to prevent us from being able to close the gap between revenue and costs.”

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